Accounting Tools

DECEMBER 23, 2023

Why Should You Reconcile Inventory? Businesses may have significant investments in inventory, perhaps covering thousands of items. The best solution is an inventory reconciliation, where you compare your on-hand inventory to your records and adjust the records as necessary.

Reconciling 75

Reconciling Record Keeping Auditing Billing 75

Accounting Tools

JANUARY 30, 2024

The first in, still here term refers to very slow-moving inventory. The acronym (FISH) is a take-off on the FIFO and LIFO acronyms that describe inventory cost layering systems. When a business has a large amount of FISH inventory, this means there is a high risk of obsolete inventory that must be written off.

Auditing 40

Auditing Accounting Accounting 40

Accounting Tools

APRIL 24, 2024

This approach can be detected after the fact by comparing actual inventory levels to the amount of sale transactions. If the inventory level is lower than indicated by the cash register transactions, someone may be removing cash. Related Articles Altered Check Bad Check Raised Check

Petty cash 74

Petty cash Deposits Auditing Billing 74

Counto

APRIL 23, 2024

A quick ratio of 1 or above is typically considered healthy, indicating that the company can meet its debt obligations without selling any inventory. Monitor Inventory Levels: Reduce slow-moving inventory to free up cash, thereby improving the quick ratio.

Accounts Receivable 52

Accounts Receivable Accounts Receivable Account Receivables Accruals 52

Accounting Tools

APRIL 18, 2024

The consignor is the initial owner of the goods, while the consignee may simply be an agent , not actually taking ownership of the goods. This means the consignor keeps a record of consigned inventory on its books until the goods are ultimately sold to a third party.

Auditing 40

Auditing Accounting Accounting 40

Accounting Tools

OCTOBER 21, 2023

Working capital is the difference between current assets and current liabilities, and is primarily comprised of accounts receivable , inventory , and accounts payable. It is nearly impossible to avoid increases in working capital if management insists on keeping stocks of inventory on hand to meet projected customer needs.

Accounts Receivable 75

Accounts Receivable Accounts Receivable Account Receivables Computation 75

Accounting Tools

APRIL 9, 2024

Related AccountingTools Courses Fixed Asset Accounting How to Audit Fixed Assets When to Take a Write-Down A write-down should be taken as soon as management is aware that the market value of an asset has fallen; they are not supposed to delay this recognition , as often happens when a company wants to manage its earnings.

Auditing 40

Auditing Accounting Accounting 40

Accounting Tools

APRIL 25, 2024

A downside of more aggressive collection activities is that it can be off-putting to customers, who may take their business elsewhere. Inventory Planning A company may elect to increase its inventory levels in order to improve its order fulfillment rate. This will increase the inventory investment, and so uses cash.

Collections 40

Collections Accounts Payable Accounts Payable Accounts Receivable 40

Accounting Tools

SEPTEMBER 23, 2023

Related Courses Accounting for Inventory How to Audit Inventory What is Physical Inventory? Physical inventory is an actual count of the goods in stock. This can involve counting, weighing, and otherwise measuring items, as well as asking third parties for counts of inventory items that have been consigned to them.

Auditing 40

Auditing Accounting Accounting 40

Accounting Tools

APRIL 6, 2024

This contain an estimate of the value of the finished goods inventory, which is derived from estimates of product demand and the number of units that will be produced during the budget period. A similar problem can arise with inventory , which is another component of working capital. Ending finished goods budget.

Budgeting 74

Budgeting Accounts Receivable Accounts Receivable Account Receivables 74

Accounting Tools

FEBRUARY 8, 2024

The consignee does not formally take possession of the goods until it pays the consignor. Is a Consignee Responsible for Inventory Damage? From the perspective of the consignee, goods received on consignment do not appear on its balance sheet, since it does not own the inventory.

Accounting 40

Accounting Accounting 40

Accounting Tools

MAY 3, 2024

Most lines of credit for smaller businesses are secured liabilities; lenders may insist on using all of a firm’s assets as collateral on these loans, though they may only require that its accounts receivable and inventory be used. A business may take out a loan in order to purchase a specific piece of equipment. Equipment loan.

Accounts Receivable 40

Accounts Receivable Accounts Receivable Account Receivables Accounting 40

Accounting Tools

JULY 26, 2023

Related Courses Business Ratios Guidebook Inventory Management The Interpretation of Financial Statements What is Days Inventory Outstanding? Days inventory outstanding measures the average number of days required for a business to sell its inventory.

Financial Statements 40

Financial Statements 40

Accounting Tools

OCTOBER 14, 2023

Related Courses Inventory Management Operations Management What is a Stockout? A stockout occurs when customer orders for a product exceed the amount of inventory kept on hand. This situation arises when demand is higher than expected and the amount of normal inventory and safety stock is too low to fill all orders.

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Accounting Tools

MAY 24, 2023

Thus, even a public company can take advantage of a soft close two-thirds of the time. Related Articles Accounts That are Closed at Year End Automate the Cutoff Closing Entries | Closing Procedure Fast Close Metrics The Public Company Close The Virtual Close

Accruals 75

Accruals Financial Statements Account Reconciliation Auditing 75

Accounting Tools

OCTOBER 19, 2023

The liquidity index calculates the days required to convert a company's trade receivables and inventory into cash. Multiply the ending inventory balance by the average inventory liquidation period. This includes the average days to sell inventory and to collect the resulting receivables.

Collections 40

Collections Billing 40

Accounting Tools

JULY 18, 2023

This entry can take many forms, but there is usually a debit to the bank fees account to recognize charges made by the bank, with a credit to the cash account. Obsolete inventory entry. When creating a reserve for obsolete inventory , debit cost of goods sold and credit the reserve for obsolete inventory.

Petty cash 75

Petty cash Accounts Payable Accounts Payable Payroll 75

Accounting Tools

SEPTEMBER 9, 2023

Related Courses Accounting for Inventory Inventory Management What is the Obsolete Inventory Percentage? The obsolete inventory percentage is used to derive that portion of inventory that is no longer usable.

Accounting 40

Accounting Accounting 40

Accounting Tools

OCTOBER 13, 2023

Example of Senior Debt A company has multiple levels of debt, of which its line of credit with Fourth Bank is the most senior debt; it is secured by the company’s accounts receivable and inventory. Related Articles Senior Security

Corporate Finance 40

Corporate Finance Accounts Receivable Accounts Receivable Account Receivables 40

Accounting Tools

OCTOBER 19, 2023

It usually takes a certain amount of invested cash to maintain sales. There must be an investment in accounts receivable and inventory , against which accounts payable are offset. A spike might also be triggered by a decision to keep more inventory on hand in order to more easily fulfill customer orders.

Accounts Payable 40

Accounts Payable Accounts Payable Accounts Receivable Accounts Receivable 40

Accounting Tools

OCTOBER 7, 2023

Once problems have been detected, management can take steps to mitigate the risk that they will occur again in the future, usually by altering the underlying process. Related Articles Continuous Controls Monitoring Control Assessments How to Fine Tune Your Control System (podcast) Management Control System Tests of Controls

Bank Reconciliation 40

Bank Reconciliation Accounting Accounting 40

Accounting Tools

MAY 21, 2023

Related Courses Accounting for Freight Accounting for Inventory Inventory Management The term FOB is an abbreviation of free on board. These goods are part of the seller’s inventory while in transit. These goods are part of the buyer’s inventory while in transit. Related Articles Freight In Freight Out

Accounting 40

Accounting Accounting 40

Accounting Tools

OCTOBER 11, 2023

Consequently, an astute management team will focus its attention on shrinking the investment in inventory. This can result in a number of operational and policy decisions, such as: Outsource production, to avoid an investment in inventory. Install a just-in-time production system, to reduce the inventory investment.

Collections 40

Collections Bookkeeping Billing Invoicing 40

Accounting Tools

AUGUST 24, 2023

Related Courses Accounting for Inventory Inventory Management What are Holding Costs? Holding costs are the costs incurred to store inventory. Depreciation Cost The company incurs a depreciation charge in each period for all storage space, racks, and equipment that it owns in order to store and handle inventory.

Payroll 40

Payroll Tax Accounting Accounting 40

Counto

MARCH 27, 2024

Consider diversifying your sourcing channels to mitigate risks and ensure a steady supply of inventory. Take into account listing fees, selling fees, payment processing fees, and additional costs like fulfilment and inventory fees. Providing a seamless checkout experience can lead to repeat business and positive reviews.

Customer Service 52

Customer Service Budgeting Tax Accounting 52

Accounting Tools

NOVEMBER 7, 2023

Related Courses Accounting for Inventory How to Audit Inventory Inventory Management Obsolete inventory must be identified, so that management understands how much of its inventory investment is worthless. We note below several methods for identifying obsolete inventory.

Computation 40

Computation Billing Auditing Accounting 40

Accounting Tools

SEPTEMBER 6, 2023

Related Courses Accounting for Inventory How to Audit Inventory The Differences Between FIFO and LIFO FIFO and LIFO are cost layering methods used to value the cost of goods sold and ending inventory. There may be many inventory layers, some with costs from a number of years ago. Why use one method over the other?

Record Keeping 40

Record Keeping Accounting Accounting Financial Analysis 40

Accounting Tools

MAY 7, 2024

The more critical performance measurements may be distributed daily, so that managers can take immediate action to remediate problem areas. Related Articles Accounting Ratios Activity Ratios Efficiency Ratios Operating Performance Ratios

Financial Statements 40

Financial Statements Collections Accounts Receivable Accounts Receivable 40

Accounting Tools

MAY 19, 2023

Examples of Ledger Accounts Examples of ledger accounts are cash, accounts receivable, inventory, fixed assets, accounts payable accrued expenses, debt, stockholders’ equity, revenue, cost of goods sold, salaries and wages, offices expenses, depreciation, and income tax expense.

General Ledger 75

General Ledger Accounting Accounting Reconciling 75

Accounting Tools

JUNE 21, 2023

Related Courses Accounting for Inventory How to Audit Inventory How to Count Inventory In a business that does not have accurate inventory records, it is necessary to periodically conduct a complete count of the inventory (known as a physical count ). The steps in the process are noted below.

Data Entry 40

Data Entry Auditing Accounting Accounting 40

Accounting Tools

NOVEMBER 5, 2023

Once these issues have been identified, managers can take steps to reduce the risk of their re-occurrence, typically by altering the underlying process. For example, a physical inventory count can spot cases in which actual inventory quantities are lower than what is recorded in the accounting records.

Bank Reconciliation 75

Bank Reconciliation Auditing Financial Statements Accounting 75

Accounting Tools

JUNE 14, 2023

In a review, management takes responsibility for the preparation and presentation of the entity's financial statements, while the accountant should have a sufficient level of knowledge of both the industry and the entity to review the financial statements. Are physical inventory counts performed? Are there any non-current receivables?

Financial Statements 75

Financial Statements Auditing Accruals Financial Reporting 75

Accounting Tools

OCTOBER 6, 2023

This assessment must be conducted on a regular basis, to take into account any new risks introduced by changes in the business. For example, there may be accounting systems in place to periodically conduct inventory audits and fixed asset audits. In addition, there may be off-site backups to minimize the risk of lost data.

Financial Statements 75

Financial Statements Auditing Accounting Accounting 75

Accounting Tools

OCTOBER 7, 2023

Related Courses Effective Customer Service Inventory Management What is a Back Order? Back orders are heavily influenced by the inventory stocking policies of a business. However, this requires a major investment in inventory, and may result in write-offs related to obsolete goods.

Customer Service 40

Customer Service Accounting Accounting 40

Accounting Tools

SEPTEMBER 18, 2023

Also, the type of FOB shows which party takes legal responsibility for the goods being shipped, and at what point during transport that responsibility is transferred. FOB Destination FOB destination means that the customer takes delivery of goods being shipped to it by a supplier once the goods arrive at the customer's receiving dock.

Purchase Order 40

Purchase Order Collections Invoicing Accounting 40

Accounting Tools

JULY 12, 2023

A separate initiative to reduce inventory levels calls for purchases in quantities of 1,000 units. per unit cannot be corrected as long as the inventory reduction initiative is continued. Related Articles Accounting for Variances Cost Variance Analysis Exception Report Favorable Variance Variance Analysis

Budgeting 75

Budgeting Budgeting Manager Cost Accounting Accounting 75

Accounting Tools

AUGUST 6, 2023

Related Courses Accounting for Inventory Business Ratios Guidebook Inventory Management What is Inventory Turnover? Inventory turnover is the average number of times in a year that a business sells and replaces its inventory.

Purchase Order 40

Purchase Order Budgeting Collections Accounting 40