Inventories

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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How are inventories reported on financial statements?

Financial Statements: According to the international accounting standards and generally accepted accounting principles, every entity is supposed to prepare annual financial statements including the following: Income statement Balance sheet Statement of changes in equity Statement of cash flow These statements or reports are made in order to provide a clear understanding of how the business …

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Inventories Vs. Fixed Assets: Why and What Are They Different?

Introduction Business is the asset of every businessman and businesswoman, and the assets of the business are the fixed assets and inventory. At the start of business studies, most students are confused about fixed assets and inventories.  In actual business, there are clear differences in both of the terminologies.  Here are the definitions and the …

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How do Inventories Present in Statement of Cash Flow?

Introduction: Inventory or stock-in-trade is the goods or commodities held by an entity for the purpose of resale or trade. At the end of an accounting year, companies usually have unsold goods in their warehouses which are referred to as closing inventory or closing stock-in-trade. This item is not reported in the income statement, but …

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Auditing Inventories: Procedures, Risks, Assertion, and More

Overview: There are many audit procedures and approaches that auditors could use to perform during their detailed testing of the inventories report by management in the financial statements. Before going into detail on the procedure, it is good to start with the overview of inventories first. Inventories are the current assets that reporting in the …

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When should inventories recognize in financial statements?

What is inventory Inventories are items or assets that are held for selling to customers but not for internal use in business. Inventories are the entity’s assets that report in the financial statements are current assets on the balance sheet. The recognition of inventories in the financial statements of the entity is similar to the …

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Physical verification of fixed assets and inventories

Definition: Physical verification is the procedure that is normally performed by the auditor to confirm the existence of certain physical assets that records in the client’s financial statements. Most of the assets that auditors verified are fixed assets and inventories. The auditor might also use this procedure to confirm the condition of those assets. The …

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