Inventory

This chapter discusses the inventory management, inventory purchasing, and inventory receiving. Items that may be included in inventory are those that are held for sale, are being produced prior to sale, or are consumed in the production of such items. A physical inventory count can be eliminated if accurate perpetual inventory records are available. The accountant should evaluate company's resources prior to embarking on this process to ensure that they are sufficient to set up and maintain this system. The physical inventory is a manual count of all inventories on hand and is used to obtain an inventory valuation for the period-end financial statements. Physical inventories are still used by many companies and even those that have converted to perpetual systems may find that sections of the inventory located outside of the warehouse, such as work-in-process, require a periodic physical count.