Stock verification

Stock verification defined as the physical counting, weighing, or measuring the stock materials held and making a record of These figures. It is an annual exercise coincides with the closing of accounts. They are raw materials, machinery spares, finished and semi finished goods. In order to avoid discrepancy in stocks, constant review of stocks, up to date posting, Reconcile the physical and book balances is of prime Importance. The main objective of the verification process is to identify the Weaknesses in the Operations of the warehousing system. To ensure the input, output and stock on hand accounted for accurately. Ensure proper placement of materials. It HELPS Also to identify slow, nonmoving and obsolete items. The purpose is to set up records as the basis for control and secondly to pass on accountability from one department to Another. The primary purpose is to assure That inputs, outputs and the stock on hand have been accounted for accurately. A careful planning, well organized and executed stock verification Will Give tremendous Advantages to the organization. Take care to avoid double counting and omitting Some items.

periodic and perpetual

The two types of inventory systems that are common in business are periodic and perpetual. Both involve tasks or activities that relate to the physical and accounting methods of reconciliation. The periodic system is somewhat easier, as it only requires for the recording of financial inventory information on a monthly, quarterly, or annual basis. For example, the general ledger will include a starting figure for the quarter. Accountants will add the total inventory purchases for this time period, deduct sales and adjustments, and then present a final figure on the companys balance sheet. Physical inventory counts under the periodic method are typically quarterly or annual. More frequent counts may be necessary if theft occurs, or if a significant number of inventory products continually wind up damaged going through the companys processes.

The perpetual inventory system is intended as an aid to material control. It is a system of stock control followed by stores department. The system follows a method of recording stores by which information about each receipt, issue and current balance of stock is always available.

Continuous stock verification: This system comprises of counting and verifying i number of items at random daily throughout the year so that all items of stores are verified several times during the year. Notice of the particular stock to be verified each clay is given to the storekeeper only on the date of actual verification.

Standard Cost Method

Standard costing and the related variances is a valuable management tool. If a variance arises, management becomes aware that manufacturing costs have differed from the standard (planned, expected) costs. If actual costs are greater than standard costs the variance is unfavorable. An unfavorable variance tells management that if everything else stays constant the company's actual profit will be less than planned. If actual costs are less than standard costs the variance is favorable. A favorable variance tells management that if everything else stays constant the actual profit will likely exceed the planned profit.