How to count inventory at the year end
The ledger does not know what is left on the shelves. See what a year-end count includes and how a count becomes a value.
Task 1Why inventory has to be counted4 questions
Inventory is goods bought to sell that are still unsold. During the year every purchase is debited to Purchases, so the ledger has no record of what is left on the shelves.
The only way to know is to count. The count is done at the close of business on the last day of the year.
- Count everything the business owns and holds for sale
- Include goods that have arrived, even if the supplier's invoice has not
- Leave out goods already sold and invoiced to a customer, even if they are still waiting to be collected
- Leave out things the business uses but does not sell, such as its till and shelving
Task 2From a count to a value4 questions