What is inventory
Subject: Accounting | Topics:

There’s many different ways that companies handle their inventory. Overall it depends on what kind of business it is. For example, a food manufacturer who makes canned fruit may take into account every single piece of that can in its inventory. The materials used to make the can, the labels, the fruit, and the sugary filling could all be part of the overall analysis of inventory. Keeping track of inventory can be a complex process.

Inventory is the total amount of goods and or materials contained in a store or factory at any given time. Store owners need to know the precise number of items on their shelves and storage areas in order to place orders or control losses. Factory managers need to know how many units of their products are available for customer orders. Restaurants need to order more food based on their current supplies and menu needs.

The word ‘inventory’ can refer to both the total amount of goods and the act of counting them. Many companies take an inventory of their supplies on a regular basis in order to avoid running out of popular items. Others take an inventory to insure the number of items ordered matches the actual number of items counted physically. Shortages or overages after an inventory can indicate a problem with theft (called ‘shrinkage’ in retail circles) or inaccurate accounting practices.

What is inventory

 

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