How to inventory current assets
inventory of current assets
The inventory of current assets is one of the financial inventory processes carried out by different institutions and their different fields of work. The inventory of financial assets includes the inventory of securities, the inventory of cash assets, the inventory of debtors, and the inventory of commodity stock. It should be noted that choosing an appropriate policy for the inventory process and supporting it with distinctive technology facilitates the inventory process of current assets.[١] We will review these topics below.
Stock inventory
Securities consist of stocks and bonds, which represent companies’ investment in the stock market, i.e. the stock exchange: [٢]
- Stocks
They are equal value certificates that represent the rights of shareholders in the companies in which they have contributed, and represent a part of capital A specific company.
- Bonds
They are equal value bonds that represent the rights of the lenders until the time comes, and a pre-determined interest rate is added to them.
Securities can be classified according to the Financial Accounting Standards Board into 3 groups:[٢]
- Securities that are traded immediately, making them highly liquid and therefore almost equivalent to cash.
- Future trading securities with a maturity date.
- Securities available for sale.
Inventory and reconciliation of cash assets
This process includes inventorying the cash register, the bank inventory, and any assets that can be easily converted into cash in a short period of time, such as financial investments purchased for the purpose of trading. Below we summarize each of them:[٢]
Fund inventory
It is done at the end of the accounting period, where an inventory is made of the actual balance of everything in the treasury and compared to the book balance. This comparison results in one of 3 results:[٢]
- The actual balance equals the book balance, which means Non-existence Deficit or excess.
- The actual balance is less than the book balance, which means there is a deficit in the fund and requires adjustments.
- The actual balance is greater than the book balance, which means there is an increase in the fund and requires adjustments.
Bank inventory
This process involves taking an inventory of all the amounts deposited in the current accounts you have in banks, and this process includes two simultaneous issues:[٢]
- The organization opens a bank account in its books in which it is a debit for cash deposits made in the bank and a credit for payments made by the bank.
- The bank opens an account for the organization in which it is a creditor for cash deposits made and a debtor for payments made to the organization's account. This process usually ends with the preparation of a settlement memorandum.
Debtors inventory
This process is based on inventorying and settling debtors’ accounts, and is The company's rights against others, whether individuals or companies, due to the existence of Transactions between them, and these transactions include the sale of goods or the provision of services to customers, but on deferred payment, i.e. collecting the dues at a later time.[٢]
If this company relies mostly on deferred sales, it should evaluate the accounts receivable at the end of the accounting period. The aim of this step is to disclose the accounts receivable to arrive at the net realizable value.[٢]
These values can be classified into 3 main groups:[٢]
- Bad debts
It is the one that there is no hope of collecting, and when it is confirmed, it is considered a loss for the establishment.
- doubtful debts
It is the one that there is doubt about the possibility of collecting it and it is determined through two methods, as it can be estimated as a percentage of the debtors’ balance or as a percentage of deferred sales.
- Good debt
These are debts that we guarantee to collect.
Stocktaking
In this process, we make an actual count of the project’s inventory in the inventory record. Inventory means all raw materials, even food and any part that enters into the work and is used in manufacturing processes or to meet the services required in the future.[٣] Specific methods should be followed to determine the value of inventory, where either the cost or market rule is followed and the lower of the two is chosen.[٢]
General accounting rules can be followed regarding inventory and settlement of goods, which are as follows:[٣]
- Determine the missing quantity if there is missing stock.
- Determine the quantity of damaged stock if there is stock in poor condition or damaged.
- Identify inventory that can be sold quickly and inventory that will take longer to sell.
- Determine whether the stock is in high or low use.
- Determine which inventory needs to be ordered more.
the reviewer
- ↑ CAMELIA BURJA, VASILE BURJA, ANALYSIS MODEL FOR INVENTORY MANAGEMENT, Page -. Edited.
- ^ A for T Th G H K of the Z hail hail, Accounting Basics, page -. Adapted.
- ^ A for Ministry of Education in the Kingdom of Bahrain, “Small projects and entrepreneurship”، Ministry of Education in the Kingdom of Bahrain, accessed on 2/21/2022. With modifications.
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