Inventory Recording Methods

The term supplies is to show the existence of objective goods to be sold back to the normal activities of companies and goods are still in the production process.

Inventories (stock) is the merchandise ready for sale on the last day of a period accounting. At the beginning of next period inventories will be the beginning inventory. Stock end are reported in the balance sheet as current assets. The calculation of inventory and price merchandise of goods will be calculated using the method of calculating basic merchandise.

This methode  relates to the assumption (assumption) that is used to determine the current cost and the concrete on the order of release of goods from the warehouse. Principal methods are commonly used as follows.

a. First In First Out method (FIFO)
This method assumes that the goods are first entered into the warehouse,
will be excluded in advance from the warehouse. Determination of cost of goods sold is
first time the price of goods purchased. 

b. Last In First Out method (LIFO)
This method assumes that the final goods into the warehouse will be issued
advance from the warehouse. Determination of cost of goods is the last item purchased. 

c. Average Method
This method assumes that the determination of cost of goods is the average purchase
goods of different time.

These assumptions were used only for purposes of calculating the cost of goods and no relation to the sequence of actual expenditure. Merchandise inventory calculation system can be done as follows.

a. Periodic Inventory System

In a periodic inventory system, the company calculates the cost of goods sold at the end accounting period. During the accounting period were recorded on the purchase or reception, which will be used as a basis for determining the value of inventories. In general, this method is used in companies that sell merchandise at a price relative inexpensive, but high sales levels. With this method, a physical count of inventory is determined based on a periodic basis. Therefore, this system is also called a physical inventory system. Within this system purchase will be added to the value of beginning inventory, ending inventory is calculated and determined its value, then the difference between the beginning inventory plus purchases with a value of ending inventory recorded as cost of goods sold.

b. Perpetual Inventory System

In this method of inventory is calculated and determined each transaction receipt or expenditures. Accounting system is a feature of a good cost accounting, because the using the value of inventory can be known and determined at any time and prices goods sold can be determined at the time of sale.