Inventory Verification

Inventory Verification Services in Dubai, UAE

Inventory verification significantly reduces inventory loss for the business and gives the management confidence that the inventory figures in the financial statements are accurate. The most precious asset of every business is its inventory, which is also the most vulnerable

Inventories are defined as the asset kept for sale in the regular course of business, in the production process for resale, and in the form of materials or supplies to be used in the production process or the provision of services, according to International Accounting Standards (IAS 2). Inventory are measured or valued at a lower cost or net realisable value in accordance with IAS 2.

What is Inventory Verification?

Inventory Verification or Stocktaking is a physical checking of stock of goods or inventory in the store after a regular interval of time. Inventory Verification or Stocktaking is made periodically, normally made at the end of the financial year at the time of finalization of accounts.

Satisfy legal standards - All legal requirements and compliances will be determined while designing procedures, guaranteeing that the business is adhering to local laws.

Create a chain of command. By outlining a hierarchical structure, you may give staff guidance as they go about their work, increasing efficiency and cutting down on the time spent asking for permission.

Easily transfers work - After the data process is specified, a worker can complete the jobs purely in accordance with the established protocols. New hires will be able to readily adjust to the job thanks to this.

Objectives of Inventory Verification

The following are the goals of inventory verification:

• Check the accuracy of store records.
• Present the value of the closing stock.
• Make final accounts of the organization.
• Disclose fraud, thefts, and losses of the goods in stock.
• Show any weakness in the system of storage and control over the stock of goods.

Reason for conducting an Inventory Verification

The main goals of an inventory verification are to establish the stock's existence and assess its realisable value. Daily inventory verification is a laborious chore for every firm because inventory is an asset that moves around a lot every day.

The accomplishment of overall business objectives depends on effective stock management. The practise of managing and maintaining a proper stock or inventory level in the business and ensuring that stock is available when it is necessary in the business is known as stock management. Receiving, Moving, Storing, and general physical control of inventory are all referred to as physical stock control.

Raw materials, work-in-progress, and finished commodities are the several kinds of inventories. Raw materials are the things that are used to create a company's product. Work in progress refers to semi-produced or semi-finished products in a business, while finished goods refers to fully manufactured or finished products in a business. Stock refers to the quantity of unsold items kept by a company. Closing stock or closing inventory refers to the amount of unsold merchandise remaining at the end of the period as opposed to the amount remaining at the beginning of the period.

The term "stock turnover" refers to the movement of stock or inventory inside a company. Inventory turnover is another name for stock turnover. The correlation between average stock or average inventory and the cost of goods sold or the cost of sales is known as the stock turnover ratio. Average inventory/Cost of goods sold is the stock turnover ratio. As a method of material control, the inventory turnover ratio is helpful in preventing irrational expenditures on resources with low consumption. Also, it aids in preventing stock obsolescence and avoiding needless storage expenditures. The cost of sales refers to the total amount of items sold by the company. Starting stock plus purchases minus closing stock equals cost of goods sold.Average stock is the average of the opening and closing prices. Average inventory is another name for the average stock. Average Stock = Starting Stock + Closing Stock / 2. The number of days it takes for the typical inventory to be consumed can be used to express the stock or inventory turnover ratio.

The procedure for controlling the organization's inventory of items is called stock management. The periodic inventory system and the perpetual inventory system are the two main stock management systems.

The periodic inventory system is an inventory system where changes are routinely made to the stock of the products. Another name for it is a physical inventory system.

The perpetual inventory system is an inventory system where changes are continuously made to the stock of items.

The approaches for determining the worth of the organization's inventory are known as stock management procedures. The popular stock management techniques are First in, First out and Last in, First out.

Stock items are distributed according to the first in, first out (FIFO) approach, in the order that they are received in the store. The first items received will be distributed first. First in, first out. In other words, the old stocks are issued first, and then the new stocks. With this procedure, the closing stock of products will be valued using the most recent price.

Stock items are distributed according to the first in, first out (FIFO) approach, in the order that they are received in the store. The first items received will be distributed first. First in, first out. In other words, the old stocks are issued first, and then the new stocks. With this procedure, the closing stock of products will be valued using the most recent price.

The opposite of the first in first out procedure is the last in first out method. Here, the last-received stock goods are distributed first. Problems are caused by the most recent purchase. The issues' prices are determined by the unit cost of the most recent lot or buy.