Inventory Types and Cost Accounting Bookkeeping

Exploring the subject of accounting, one important thing is to learn the accounting of the inventory, because this is one of the most important asset a company owns and uses in daily operations. This article will cover the major types of supplies and the basic concepts are taken into account the asset value is obtained.

Concept and Types

Inventory is attributed to the current assets category, because it is used in operations in the period shorter than one year. For manufacturing or trading company is one of the most important asset, because it usually results in sales for the company when it is sold, that is a major contribution to the productive activities of the profits.

According to the principle of matching cost accounting are recognized and included in profit or loss only when they are made to make money. Therefore, when the shares acquired or produced it belongs in the category of current assets on the balance sheet and stored until sold or consumed in any other way to earn income.

When inventory is sold, only the costs of the sold items included in profit or loss - Cost of goods sold statement. The remaining stock on hand is still reflected in the balance.

Depending on the nature of the business might produce several different types of supply, namely:

finished products for sale (production) or goods (trading company)
Work in Progress (manufacturing)
commodities (manufacturing)
depleted (low value items and other items to be used in daily business activities)

Companies involved in service delivery will usually consumables, but no inventory to sell.

Cost of Inventory Acquired

There are certain costs to be included in the cost of inventory and recorded in the balance, namely:
duties
transportation (train) - a cost that the buyer supply transport to storage
acquired directly related to other costs (eg packing assembly, etc.) inventory