According to the Commercial Code, a company is required to carry out an inventory of stocks at least once a year to establish a complete balance sheet. This operation consists of quantifying the raw materials, goods, and semi-finished products of the company according to their numbers and their exact values at the time of the inventory. It is recommended to establish a list at the time of the closing of the financial year so that the quantities of the stocks can correspond well to the company’s accounts. We explain in this article how to carry out an inventory of stocks in accounting. The use of the Stock Inventory System (ระบบสต๊อกสินค้า, which is a term in Thai) comes perfectly here.
The Importance Of Stock Inventory
In principle, it is the business manager who must carry out the Stocking Inventory (ทำสต๊อกสินค้า, term in Thai). It must be said that this operation is of capital importance for the company because it has a direct impact on the annual balance sheet of the company. It also makes it possible to assess its heritage value. So, if you make mistakes in valuing stocks, the balance sheet will also be wrong. This is why it is essential to be well organized to precisely determine the differences between the actual quantities of stocks and the figures in the accounting books. Indeed, many incidents can occur during the year, those which can impact the value of stocks. This is the case with economic hazards, which directly impact the price of raw materials. Apart from that, cases of theft or loss cannot be ruled out either.
Classify Stocks According To Their Nature
To carry out the inventory, it is more practical to classify the stocks according to their nature. The operation varies according to the sector of activity of the companies, but in general, the stocks can be classified according to 5 main categories:
- Raw Materials
- The Goods
- Semi-Finished Products
- The Expendables
- Products In Production
Residual products will not be taken into account, as they can rarely be recovered. In accounting, some companies also distinguish between raw materials that go directly into the manufacturing process and fluid stocks (fuel, gas).
Count The Stored Goods
When Should An Inventory Be Taken?
Typically, most businesses need to take inventory at the end of a fiscal year. It is more practical because, at this time, the company ceases its activities, and therefore there is no more movement of stocks. However, if you manage a large company that operates in many industries and has many storage sites scattered in different locations, you recommend that you carry out a rotating inventory. This consists of carrying out several inventories during the year. Indeed, if you carry out the inventory only at the end of the fiscal year, this may require a maximum of the time, given the number of products and goods stored. You can also organize yourself by carrying out the inventory by storage location.