What is an end inventory?

Inventory is the amount of goods that the company has at the end of the accounting period. This does not include the items it needs to do business - includes only goods it sells to other businesses or the public as a normal part of its business. The company expresses this inventory in units of goods and money units for various internal records of the company. It appears in the profit statement and loss when calculating the costs of the goods sold. It appears as an asset in the balance sheet. This figure is essentially the cost of goods no sold.

Business calculates the costs of sold goods for the purpose of determining gross profit. The company does not record all income obtained from the sale of goods as a profit. The purchase of goods that sold during the period sold costs business money. The costs of the goods sold will tell the company how many goods to pay for the goods that customers purchased during this period. The total amount paid for all goods sold is deducted from the total number of sales income - this gives the company Hrubý profit.

Initial stocks plus net purchase minus the cost of sold goods is equal in stock. This formula tells the company that it started with a certain amount of goods for sale. During this period he bought more goods to maintain shelves and displays full inventory. It also sold supplies to customers during the period - the cost of selling this share is the cost of the goods sold. The goods that are still available for sale for another period is its final inventory.

Inventory is still in the premises of the company at the end of one accounting period becomes the initial or opening of the inventory of the next accounting period. To check its calculated end -stock values, Physical Inventories are performed at the end of the accounting period, usually at the end of the fiscal year. Most modern businesses rely on their computer eternal supplies to follow supplies during the fiscal year.

In order to determine the level of inventories ending in the period, it does afterHands of the physical number of all shares. It then multiplies the number for each item the cost of the item according to the accounting records. The costs of all goods are then added to the calculation of the total cost of stocks at hand. This is the amount of end inventory that can be verified against accounting records.