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Inventory Management

  • Inventory is the account where the total value of all products manufactured or held for sale or resale is recorded.
  • Balance to this account is updated on a period basis, usually monthly.
  • On the last day of the month, you should take a physical inventory of your business. Everything in stock and that can be sold should be counted.
  • If there are multiple inventory items, each category should be counted separately and listed on the sheet.
  • The Bookkeeper will enter the adjustments to the Inventory Account. Sales and Purchases should be posted before the Inventories. At the end, the total after adding the Purchases, and deducting the Sales to the initial Inventory should match the Ending Inventory.
  • Inventory which has been damage, lost, or stolen should be adjusted to the Inventory Account as Inventory shrinkage.
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