What is a periodic inventory?

also known as the number of cycles, the periodic inventory is the process of performing the physical number of all items contained in the inventory at specific intervals during the tax or calendar year. The idea of ​​this type of activity is to identify any inventory problems and make the necessary repairs to make the total inventory value accurate. This type of activity also allows you to determine whether current extradition processes work correctly and whether any shifts in the orders are needed to maintain the correct amount of specific items in the warehouse.

The process of performing a periodic inventory begins with assessing the current number of each item to be in stock. This is managed by comparing the amount listed in the lists of inventories with what is physically present in areas where the inventory is maintained. If any distraction occurs in two numbers, the differences from the difference are listed. This makes it possible to repair extracts to reflect a physical number, a process that is usually referred to as bothon the reconciliation of stocks.

Many businesses use the periodic inventory method as a means to maintain inventory records. Companies often decompose this process, so part of the total inventory is physically calculated every six to eight weeks. Larger companies may decide to carry out monthly reserves depending on the complexity of the task. For example, textile companies often log equipment and parts maintained in the inventory of what is called material codes; About six weeks, the selected number of material codes is excluded, allowing you to physically calculate all codes during the year. Along with these regular numbers, a full annual inventory, usually at the end of the fiscal year of the company, is also carried out.

While the periodicals of VVVentors are sometimes used instead of keeping records of income and payouts in real -time from inventory, this is not always. Many companies keep KONstant records and uses a periodic inventory as a means of insulation of errors that may occur, such as the inability to record the payout from the inventory. By regularly performing the physical number, it is possible to identify the differences, perhaps find the origin of the problem and make changes to prevent the same circumstances from being repeated. As another advantage, the periodic inventory also allows you to accurately calculate all taxes that may apply to the value of the total inventory.