In a business setting, an inventory is the lifeblood of the company since these are the items that are offered by the entity to its target market in order to be profitable and survive in the world of competition. Managing and controlling inventories may seem overwhelming especially when dealing with a large number of inventories on your list.
In order to account for your inventories, an inventory list, or simply inventory, is needed. This will help you get organized with your items, keeping track of every single one of them in order to manage them effectively. Presented in this article are inventory templates and examples that you may refer to in order to get started with managing your inventories.
1. Important dates: The important dates in an inventory are the beginning inventory date and the ending inventory date. The beginning inventory date refers to the date of the start of an accounting period which is also the date of the end of the preceding accounting period. On the other hand, the ending inventory date is the date of the end of the current accounting period or the date when the books of account are closed.
2. Headers: These are usually placed on top of the inventory form, which include the product name, description, number, amount, quantity, and net amount.
Product name: This pertains to the name or brand of the product in your inventory.
Description: A brief description of the inventory must also be stated along with the basic information, such as the size, volume, weight, and color.
Number: If you are dealing with large numbers of inventories, the inventory number is important. It can be in the form of item numbers or bar codes. The bar codes make it easier for you to record the sale of the item and verify the correctness of the product being recorded in your sales.You may also see accounting inventory examples.
Amount: Each of the items listed in your inventory must have a corresponding amount. Take note that you can have two different amounts for a single item. This is possible in merchandising entities where there are two or more suppliers of the company and the prices from those suppliers differ from each other. Normally, the company selling the item would add a certain percentage to the original cost to arrive at their selling price. Hence, when the original cost differs, normally, they would also differ in the selling price.
Quantity: The beginning quantity of the inventory must also be clearly specified. At the end of the accounting period, the ending quantity of the inventory must equal to the beginning inventory plus purchases minus sales.
Net amount: The net amount of each item is computed as follows: quantity of the inventory multiplied by the selling price. In order to compute for the total net value, you have to sum up the net amount of all the items in the inventory. You may also see store inventory examples.
3. Inventory assets: This pertains to the type of items on the inventory of the different business types, such as manufacturing, merchandising, and service businesses.
Manufacturing: These are entities that produce their goods and sell them to the market. Their inventories include raw materials inventory, work-in-process (WIP) inventory, and finished goods inventory. Raw materials are the basic materials needed in manufacturing their products. WIP, as the term suggests, are those materials that are still on the process of conversion. Lastly, finished goods are the products that are readily available for sale.
Merchandising: These entities buy finished products and immediately sell them to the market; hence, they do not have raw materials, WIP, and finished goods inventory. Instead, they only use one type of inventory, the merchandise inventory. You may also see landlord inventory examples.
Service: These are entities that provide services to their customers. Although they are not selling products, they still need items or inventories to perform their services.
Signature: The authorized person doing the inventory must affix his or her signature on the inventory to acknowledge that he or she checked all the information in the inventory.
There are several types of inventories, and these are as follows:
Raw materials inventory: These are materials used to produce the finished product. Examples are minerals, chemicals, paper, and wood.
Work-in-process inventory: These are materials, assemblies, subassemblies, or parts that are partially processed. These will still undergo final inspection before transferring to the finished goods inventory. Examples of this inventory are frames and casters.
Finished goods inventory: This refers to the completed goods which are readily available for sale and passed the final inspection. You may also see retail inventory examples.
Decoupling inventory: This inventory is needed when the company suffers from a machine breakdown and is in need of a sufficient input to compensate for the breakdown.
Cycle inventory: This is needed to balance the carrying cost and holding cost as suggested by economic order quantity.
MRO goods inventory: MRO or maintenance, repair, and operating (MRO) inventories serve as a support function in the production process. Examples of this inventory are screws, uniforms, and gloves.
Transit inventory: These are raw materials that are transported from one site to another for further processing.
Buffer inventory: Also known as a safety stock, this type of inventory is held for the purpose of meeting uncertainties in the future. You may also see classroom inventory examples.
Anticipatory inventory: This pertains to inventories held in case there is a labor strike, increase in demand, or increase in the price.
Below are the answers to the frequently asked questions regarding inventories.
What is inventory management software?
This refers to a software system used for tracking inventory orders, levels, sales, and deliveries. It can also be used to create a work order and bill of materials. Many entities use this software to avoid outage or overstock. It is helpful in organizing inventory data as well as retrieving them in the future. It is preferred by many because the inventory records can immediately be recovered in case of fire or other calamities since they are stored in the computer as compared to the tangible hard copy.
What is inventory turnover?
This refers to the number of times that the goods of the company have been replaced or sold within a certain accounting period. An inventory turnover provides the management insight to the effectiveness of their sales effort and serves as a basis whether or not to produce or buy more in order to meet the demands of their clients.