CAI 121 Product Id & Purchasing Unit 4 Lecture
In this unit, we will begin by discussing the responsibilities associated with receiving and inspecting products. We will also look at the formal control methods associated with the storing process, formal and informal issuing, and the methods used to determine inventory valuation. As we continue with this unit, we will examine the importance of quality management, proper handling of financial statements, and the benefits of controlling inventory. We will finish the unit by focusing on calculating food and labor costs, and identifying security issues in purchasing, receiving, storing, and issuing.
Proper receiving starts with the three Qs. You must inspect each delivery for quality, quantity, and quote. First of all, you must guarantee that all products being received meet the specifications and standards of the operation. Then you must count or weigh the products to assure that the quantity being delivered is the same as the amount that was ordered and is the same amount noted on the invoice. Lastly, you must check that the price on the invoice is the same as the price you were quoted when the order was placed. To make sure the amounts and specifications being delivered match the amounts and specifications ordered, the receiving clerk must have a copy of the purchase order. When the receiving clerk as a copy of the purchase order, they can also confirm that the prices on the invoice, are the same prices that were quoted
The ordering process begins with the decision of the customer to submit their order simply by either calling, faxing or mailing their order information. When a customer calls in their order, the customer service representatives takes down pertinent customer information, which includes the customer's name, billing and shipping address, product number and description, quantity and shipping instructions. While taking down the order, the customer service representative access the company's order entry system where inventory checks are conducted as well as credit checks are processed. In addition, delivery options are advised to the customer. Here the customer decides
As focusing on each of the five management assertions for the inventory account, we discovered that there are some risky areas that indicate the need for further attention during the audit. First of all, for existence or occurrence, all items in the inventory account must physically exist and be available for sale. Thus, the auditors should physically count finished goods, copper rod, and plastic inventories, and determine actual increase of inventories at year end. Also, they should select items from the inventory ledger and locate them and reconcile the quantity. Second, for completeness, the auditors should make sure that all existing inventories have been recorded completely , go around the warehouse and ensure all the inventories are recorded in the inventory ledger. Third, for valuation or allocation, the auditors should make sure that Laramie Wire manufacturing sticks with one valuation method(For inventory items, valuation is based on the lower of cost or market value, with several alternative methods for calculating cost), find out if there is any scrap inventory that needs to be recorded and written off ,and ask about obsolescence items. Fourth, for rights and obligations, the auditor should ask them if there is any consigned inventory at their warehouse. If there is, those inventories should not be recorded in the company's inventory ledger. Finally, for presentation and disclosure, the auditors should review the company's financial
The process requires Peyton Approved to discover how much inventory is sold and what the cost of goods will result in. The process requires the business to review three forms of merchandise inventory to determine which summary benefits the business’s operational behavior. One will discover when assuming that first inventory purchased by the store is the first to be sold, it is determined that the FIFO method displays the best financial outcome for the business. During the process of updating journal entries, one must enter the information proved appropriately into the T-accounts to add the balance under each record. Once the T-accounts for transactions and adjusted transactions are balanced, the next step is to enter the information provided on the balance sheet. The balance sheet will list Peyton Approved assets, liabilities and stockholders equity after added during the T-account process (Nobles, 2014). Once the balance sheet is completed the income statement, statement of retained earnings, and closing entries can be filled with the information proved. This will give the business a full review from journal entry to closing entries of the business for the six month accounting
25-1 The costs incurred for duplicating the computer software, documentation, and training materials from the product masters and for physically packaging the product for distribution shall be capitalized as inventory on a unit-specific basis.
Sales invoices are prepared in batches on a daily basis using numbered sales invoices. Sales invoice numbers are automatically generated by the company’s computer system. The accounts receivable clerk does not have appropriate computer rights to override the computer-generated invoice number. Upon preparing sales invoices, the accounts receivable clerk verifies that the first invoice number of the batch is consistent with the last invoice number of the previous batch. Inconsistencies or skipped sales invoice numbers are investigated and resolved before new sales invoices are prepared. The items shipped are compared to the items billed for proper quantity, price, and other sales order terms.
The FASB ASC 330 Inventory provides primary authoritative guidance for the accounting for inventory. The predecessor literature is Accounting Research Bulletins (ARB) No.43 Chapter 4, paragraph 4 (Issued June, 1953) and Statement of Financial Accounting Standard (FAS) NO.151 Inventory cost- an amendment of ARB No.43, Chapter 4 (Issued November, 2004).
330-10-30330-10-30-1 The primary basis of accounting for inventories is cost, which has been defined generally as the price paid or consideration given to acquire an asset. As applied to inventories, cost means in principle the sum of the applicable expenditures and charges directly or indirectly incurred in bringing an article to its existing condition and location. It is understood to mean acquisition and production cost, and its determination involves many considerations. 330-10-30330-10-30-2 Although principles for the determination of inventory costs may be easily stated, their application, particularly to such inventory items as work in process and finished goods, is difficult because of the variety of considerations in the allocation of costs and charges.
This worker should be restricted from taking stock. Close surveillance ought to diminish this danger. Pre-numbered dispatching forms that should be held responsible for may prevent this representative from transporting any merchandise to themselves or companions. Carrying out occasional surprise stock and resource counts and resolving the counts to the quantity documented in the records should make surveillance more practical. Utilizing systematic analysis to screen for bizarre patterns, for example, rising stock deficiencies is needed. Occasionally contrasting client and vendor addresses with those of representatives to keep workers from delivering products to themselves is likewise imperative. The bookkeeping function ought to be shared between the remaining two representatives and close surveillance ought to be carried out.
Your sister owns a small clothing store. During a conversation at a family dinner, she mentions her
When offers of reduced pricing are accepted for equipment, meeting delivery expectations becomes an important part of enhancing the customer experience to maintain satisfied loyal customers. An inventory specialist in the current distribution center would be given the additional task of segregating and maintaining inventory levels to meet the needs of the customer loyalty department.
Inventory control is the biggest challenge because of inappropriate inventory management system. There is a requirement of proper food service for better inventory control and also for identifying the important requirements. There is a need to develop the inventory methods for the products and with a standard inventory management company should try to minimize the wastes in terms of future. (Gartenstein, 2012)
Tasks: What should Alison do? o Develop plans to improve the inventory management o Develop time-based supply strategies to bring competitive advantages to the organization Identify the functions and forms of inventory What are alternatives for inventory management? o ABC classification o Supplier-managed inventories (SMI) o Just-on-time or Just-in-time (JIT) o Enhance the forecasting system (factor correlated with inventory variation) Provide training programs for current and new hiring employees 1
Inventory management has two very different, but effective methods: Vendor managed inventory, and consignment inventory. A company may choose to utilize either of these two methods to manage inventory. If a company is able to manage inventory, they will be better able to work the company's capital to the fullest extent. The following paper will identify the differences between the two as well as identify what type of company is best suited for each method.
* Assign the days-of-inventory (DOI) metric to staff members responsible for buying materials for each value stream. Buyer should focus on improving the pull and flow of inventory and on reducing inventory levels. A reduction in days of inventory is much easier to see rather than a one-tenth of a point improvement in a site inventor turn under traditional measurement systems. Using DOI metric at the value stream level, buyers begin to see how their actions on reducing inventory result in actual improvement of inventory level.