Managing and controlling your business assets and resources can be an overwhelming task. However, with the use of inventory list, or simply an inventory, keeping track of your assets and resources will no longer be much of a difficult task to deal with.
Manage your inventory with ease by making use of the downloadable inventory templates that we have provided in this article. You can easily edit these templates using Google Sheets. Also in this article, we will also get to know more about inventories, its basic elements, and its major types.
The basic elements that you must include in an inventory are the following:
1. Date: The two important dates that should be found in your inventory are the beginning inventory date and the ending inventory date. The beginning inventory date is the start of an accounting period while the ending inventory date is the end of the accounting period. It is also through this element that you can easily compare your business’ beginning inventory balance to your ending inventory balance.
2. List Headers: In order to have a comprehensive inventory management, the use of an appropriate and specific list header for each type of data you need for your inventory is a must. The common list headers that are used are item numbers, product names, amount or cost of each item, quantity, and the net value.
3. Inventory Assets: Also considered as your salable inventory, inventory assets are the goods or items listed in your inventory that you sell for profit. These include the types of inventories such as the raw materials, the work-in-process materials, and the finished goods. If you own a manufacturing business, your inventory mainly consists of raw materials. If you sell merchandise, your inventory mainly consists of finished goods. If you provide services, you only have to keep track of your equipment inventory.
4. Name and signature: The authorized person who does the inventory count must write and affix his or her name and signature to acknowledge the information he or she has written in the inventory. Having this element in an inventory will enable you to determine the accountable individual in the event that there will be errors and discrepancies.
There are various types of inventories. Each type serves a specific and crucial purpose that can make and break the success of your business operations. Learn more about some of its types below.
1. Raw Materials: This refers to the resources that you use for producing finished goods. There are two subcategories of raw materials, namely direct materials or the materials that are included in the finished goods and the indirect materials or the materials that are not incorporated in the actual product but are used in the production.
2. Work-in-Process (WIP): Although some of it has been mixed with human labor, this type of inventory refers to your business’ inventory that is not yet fully complete. While this inventory is as not as good as the finished goods, it is still necessary for the completion of one. These are also called good-in-process or semi-finished goods. You may also see accounting inventory examples.
3. Finished Goods: As the term suggests, these are the completed goods that have undergone the full production process. This is the type of inventory that you can already market and sell. Finished goods can only be obtained after the processing the raw materials and the WIP goods.
4. Maintenance, Repair & Operation (MRO) Items: These are the supplies or the equipment inventory that you use to complete and fulfill the tasks involved in the production of goods. Even if these are not incorporated and seen in the finished goods, these supplies are very much involved in the production process of the finished goods.You may also see store inventory examples.
You can find below the answers to the frequently asked questions about inventory.
The term inventory in business can mean two things. One pertains to the finished goods are sold and utilized by a business and the other is a type of tracker that manages and controls your business’ inventory. To do inventory means doing a manual inventory count of the current status of your finished goods within a certain time period.
Inventory control is important in your business operations since it helps you in assessing the current assets, completing the balance accounts, and making financial reports that are needed for a business to continue its day-to-day operations. Aside from that, maintaining your inventory control will also enable you to determine and cater your customers’ needs.
Inventories play a crucial role in the success of your business operations; hence, it is important to ensure that the inventory you create can fulfill such a role. With the help of the discussions and templates that we have provided in this article, we hope that you will be able to make an inventory that is not only void of formatting errors, but also an inventory that enables you to systematically organize, track, and manage your inventories.