Inventories

What Causes Inventory Turnover Ratio To Increase Or Decrease?

The financial statements of any business entity give insights into any business entity’s financial health and performance. However, a business entity might need to perform further analysis to deeply evaluate the financial results. Therefore, companies perform different financial analyses. The popular type of analysis is sensitivity analysis, vertical & horizontal analysis, ratio analysis, growth rates, […]

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What are Work-in-Progress (WIP) inventories? Definition, Calculation, Example, and More

Many companies sell physical products, which constitute their primary income source. Some companies may manufacture these products while others acquire them from an external source. Usually, companies also keep their stock in hand so they can meet customer demand when it arises. These may include raw materials, finished goods, or work-in-progress inventory. Every type of

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Inventories Costing: Method, Example And More

Overview Inventory costing is an integral part of inventory control and inventory management. It helps a business determine its cost of goods sold and eventually in gross profits. Different inventory costing methods can bring the different cost of goods sold results. Although a business can use any inventory costing method. Certain methods have discrete benefits

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What Is a Periodic Inventory System? (Advantages and Disadvantages Included)

The periodic inventory system is the physical counting method for inventory management. It is performed periodically to calculate inventory figures that lead to the cost of goods sold. A periodic inventory system takes time and effort as it is a laborious activity. Small businesses mostly follow the periodic inventory system with low inventory requirements. However,

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Accounting for Consignment Inventory (Definition, Treatment, Journal Entry, and Example)

Definition: Consignment inventory represents stock legally owned by one company or business but held by another. Usually, the risks and rewards associated with consignment inventory remain with the company that owns it. Consignment inventory is common in industries where companies transfer their goods to the dealer, which distribute or sell them further. The dealer, in

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Accounting for Goods in Transit (Explanation, Examples, Treatment, and Journal Entries)

What Is Goods In Transit? Goods in Transit indicates the stock that is bought from the purchaser and delivered through a dealer, nonetheless, the merchandise is in transit but still needs to arrive at the proposed buyer. Towards the ending of an accounting time frame, such stock items permit exceptional consideration for accounting such merchandise

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How to Organize Inventory for Small Businesses? 5 Importance Tips

Inventory management Inventory management is the efficient mechanism of ordering, storing, and use of the company’s inventory. The process includes the management of raw materials, components as well as finished goods. Further, the management of warehoused products and work in process items also fall under efficient inventory management. Inventory management helps to know when to

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