Inventory Count: How It Affects Results and Responsibility for Preparation

The Calculation

In commercial businesses that perform an inventory count of their goods or raw materials, there is often confusion about how this affects the financial result.

The general rule is that as inventory increases, profits also increase. This can be illustrated by the “emptying” of purchases (meaning a reduction in expenses) and the “filling” of inventory, which increases it. Naturally, when inventory levels decrease, profits also decrease.

Essentially, the cost of goods sold is calculated using the formula: opening inventory + purchases – closing inventory.

Inventory as a Control Tool

Inventory is a key tool used by auditing authorities to determine whether sales invoices have been issued. If the inventory is inaccurate, the consequences can be serious. If something is missing, it means that a sales invoice was not issued, and if there is more than expected, it means that goods were received without proper documentation. With the digital delivery note system (in its second phase, whenever it is implemented), this process will become even easier.

For a business to maintain its inventory in a relatively simple way, it needs to implement a computerized system so that as few work hours as possible are wasted.

About ACNT

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With over 35 years of experience and a team of seasoned professionals, we provide proactive support, accurate guidance, and high-quality solutions tailored to each client’s specific requirements.

We focus on the fields of cryptocurrencies and stocks, start-ups, construction companies, manufacturing businesses, and commercial/import-export enterprises.

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