Inventory defines activities primary leading to establishing actual quantity of goods owned by a company and then comparing it with the quantities arising from the relevant documents such as: invoices, PZ documents, cash-desk reports and logistics software. The notion “inventory” is often interchanged with the notion stocktaking.
Stocktaking - is an act of a physical counting process leading to the preparation of a detailed list of property assets and sources of their origin as of specified date.
Stocktaking consists of the establishment by means of actual physical counting of all property, plant and equipment (fixed assets) and monetary assets it also provides an explanation of a difference between actual balance established during the inventory and the balance resulting from books of accounts.
The main objective of a stocktaking process is to establish the actual balance of assets and liabilities. In particular it consists of:
- correlating entries in books of accounts with actual balance
- clearing accounts with people responsible for entrusted to them property items
- assessing business usefulness of property items undergoing the inventory
- counteracting irregularities having been stated during the inventory (surplus, useless items)
- establishing proper financial outcome
Stocktaking concerns the following activities:
- inventory through a physical counting of all the property items that remain at a business entity disposal
- valuation of property items
- obtaining written information from a business entity's contractors on:
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- financial assets deposited in bank accounts
- granted loans
- receivables and liabilities
- the company’s own assets entrusted to contractors
- comparing inventory records of some items (for instance land) with referential documents
- establishing and explaining the causes of losses and discrepancies in quantities
- proposing and substantiating motions concerning methods of settlement of inventory differences
- indicating ways of removing irregularities in the management of a given entity's property
There can be named following types of stocktaking:
- Stocktaking through physical counting - performed by members of a stocktaking commission on the basis of direct observations and measurements of property items conducted in a given business entity. It comprises such accessible items as:
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- fixed assets
- tangible current assets
- cash at the entity’s cash-desk
- securities
- coordinating balances with contractors -comprises mainly:
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- balance of financial assets deposited in bank accounts
- loans and credits
- receivables
- liabilities
- verification of records concerns - assets and liabilities the balance of which cannot be established through inventory or through coordinating balances with contractors In particular it relates to:
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- arable lands
- balance or local authorities’ receivables and liabilities
- other items impossible to access
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