Sales and Inventory System
TABLE OF CONTENTS - CHAPTER 11
I. CHAPTER 11 – INVENTORY 1
II. OVERVIEW AND OBJECTIVES 1 A. Overview 1 B. Objectives 1
III. DEFINITION OF INVENTORY 1
IV. INTERNAL CONTROLS 2
V. ESTABLISHING AND MAINTAINING AN INVENTORY 2
VI. VALUING THE INVENTORY 4 A. FIFO 5 B. Weighted Average 6
VII. YEAR-END PHYSICAL INVENTORY 7
VIII. EXHIBITS 8
CHAPTER 11 – INVENTORY
The purpose of this chapter of The Guide is to explain the concept of inventory and to discuss the policies, guidelines, and procedures associated with inventory on the Boulder campus.
OVERVIEW AND OBJECTIVES
1 Overview
Each department’s purchases of goods for consumption or resale may represent inventory. Departments that hold inventory must maintain inventory records which accurately reflect the valuation of the inventory at the end of each month. Additionally, these departments must conduct an annual inventory.
2 Objectives
The principal accounting objectives of maintaining inventories are: 1. To allow for the proper assignment of costs to an accounting period. 2. To present an accurate portrayal of the department’s assets on the university’s financial statements.
DEFINITION OF INVENTORY
The State of Colorado year-end closing instructions define inventories as those that total $35,000 or more per location. If inventory value drops below $35,000 in the normal course of business (until it is restocked), it continues to be classified as inventory on the books. However, if a decision is made to permanently reduce the inventory below $35,000, it should be reclassified from an asset to an expense.
In order to minimize year-end workload, inventories of less than $35,000 will not be booked in the general ledger inventory codes. These smaller inventories should be expensed to cost of goods sold as they are purchased. As a valid internal control function, departments may choose to continue their inventory records
I. CHAPTER 11 – INVENTORY 1
II. OVERVIEW AND OBJECTIVES 1 A. Overview 1 B. Objectives 1
III. DEFINITION OF INVENTORY 1
IV. INTERNAL CONTROLS 2
V. ESTABLISHING AND MAINTAINING AN INVENTORY 2
VI. VALUING THE INVENTORY 4 A. FIFO 5 B. Weighted Average 6
VII. YEAR-END PHYSICAL INVENTORY 7
VIII. EXHIBITS 8
CHAPTER 11 – INVENTORY
The purpose of this chapter of The Guide is to explain the concept of inventory and to discuss the policies, guidelines, and procedures associated with inventory on the Boulder campus.
OVERVIEW AND OBJECTIVES
1 Overview
Each department’s purchases of goods for consumption or resale may represent inventory. Departments that hold inventory must maintain inventory records which accurately reflect the valuation of the inventory at the end of each month. Additionally, these departments must conduct an annual inventory.
2 Objectives
The principal accounting objectives of maintaining inventories are: 1. To allow for the proper assignment of costs to an accounting period. 2. To present an accurate portrayal of the department’s assets on the university’s financial statements.
DEFINITION OF INVENTORY
The State of Colorado year-end closing instructions define inventories as those that total $35,000 or more per location. If inventory value drops below $35,000 in the normal course of business (until it is restocked), it continues to be classified as inventory on the books. However, if a decision is made to permanently reduce the inventory below $35,000, it should be reclassified from an asset to an expense.
In order to minimize year-end workload, inventories of less than $35,000 will not be booked in the general ledger inventory codes. These smaller inventories should be expensed to cost of goods sold as they are purchased. As a valid internal control function, departments may choose to continue their inventory records