How do we update inventory using the year-end physical count and begin the next cycle using the periodic inventory system?
IN PERIODIC INVENTORY SYSTEM, CONTINUOUS RECORD OF CHANGING IN INVENTORY IS NOT MAINTAINED.THE PURCHASES DURING THE YEAR ARE RECORDED IN PURCHASE ACCOUNT AND THE SALES DURING THE YEAR ARE RECORDED IN SALES ACCOUNT. AT THE END OF THE YEAR , PHYSICAL COUNTING OF INVENTORY IS DONE USING INVENTORY CALCULATION METHODS SUCH AS FIFO, LIFO AND WEIGHTED AVERAGES.
AT THE END OF THE YEAR , WE UPDATE THE INVENTORY USING THE YEAR END PHYSICAL COUNT METHOD TO KNOW THE COST OF GOODS SOLD AND VALUE OF CLOSING INVENTORY .
STEPS TO DO PHYSICAL COUNT OF INVENTORY:
1. ASSIGN MAPS AND PROVIDE EQUIPMENTS TO STAFF TO COUNT THE INVENTORY.
2.STAFF MEMBERS COUNT THE ASSIGNED INVENTORY.
3.STAFF FILL THE COUNT TAGS
4.RETURN THR COUNT TAGS TO THE MANAGER
5. ACCORDINGLY, MANAGER UPDATE THE INVENTORY
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