In accordance with the regulation concerning receipts and transfer book for tax purposes, before establishing such book and at the end of each fiscal year (also in case of partners, change in proportion of partners’ shares or in case of liquidation of business activity) a taxpayer is obliged to make and to enter into a book of inventory through physical counting all commercial goods, basic and auxiliary materials, semi-products, finished products, rejected products and wastes (hereinafter named inventory through physical counting).
Such inventory must be enter into books also in a case if persons conducting business activities make inventory each month and in a case if based on the separate provisions such inventory is ordered by tax office.
If business activity is being put into liquidation the inventory through physical counting should include also equipment.
The regulation on book keeping defines what should be included in the inventory through physical counting. The explanations concerning all the concepts relating to property items that undergo the inventory can be found in the provisions of the regulation. Thus, goods are defined as commercial goods, basic and auxiliary materials, semi-products, finished products, rejected products, wastes and materials designed for further processing, considering that:
- commercial goods are defined as products designed to be sold as they are and by-products obtained during agricultural special production processes;
- basic materials are materials which during the production processes or during providing services are becoming the main substance of finished products; included are materials which make a part of a product closely related to it (for instance a bottle as a packaging) and reusable packaging (for instant pallets), if they are not fixed assets;
- auxiliary materials are materials that are not basic materials and which are used during business activity and which give their properties to a product;
- finished products are products manufactured by a company, the manufacturing process of which has been accomplished, services, development and research work, design work, map and survey work, accomplished work (including construction work);
- not-finished production is a production under construction, semi-products and also work and services before their accomplishment;
- rejected products are finished products manufactured by a company which are not compatible with technical requirements and commercial goods damaged/destroyed during transportation and products of partially lesser value;
- wastes are materials, which due to technological processes or due to damages/destruction have completely lost their use value.
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