Inventory Maintain in Accounting
Inventory is the physical supplies you sell or use to provide services as part of your business. Your inventory is one of your most valuable assets, and keeping track of it accurately is essential to running your business smoothly. Whether you use an electronic inventory tracking system or do everything yourself manually, maintaining accurate inventory records will contribute to your business’ success. Note that a discussion of inventory can refer to the tangible goods your business has on hand, or it can refer to the accounting values for inventory. This article will discuss controlling physical inventory.
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Types of inventory Some Examples
1. Raw Materials
Company warehouses don’t just house finished products. Some manufacturers use distribution centers to store raw materials for their production lines. Inventory control software must distinguish between items on shelves meant for customers and materials allocated for business use. Barcoding enables accurate stock levels and movements by automating data collection for inventory.
2. Cycle Inventory
Inventory that moves quickly through the supply chain is called cycle stock. These are products that arrive from a supplier or manufacturing process and are almost immediately pushed out to customers. Warehouse workers need flexible and quick procedures to keep up with the speed of cycle movements.
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Reason for holding inventory in accounting
Any firm would like to hold inventory at a specific level to meet a smooth, uninterrupted production schedule or to cater to consumer demand in the case of wholesalers or Retailers or to achieve the economies of scale from operations or protect the image from uncertainties or fluctuating demand as the case may be.