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Accounting At Your Fingertips, 2e by George Murray, CPA.

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5.2 Determining Inventory Quantity

Taking Physical Inventory

Estimating Quantities

One of the basic issues of inventory valuation is determining the quantity of goods to be included. In this subchapter, you learn how to take a physical inventory and ways to monitor inventory levels when counting all your stock isn’t feasible.

Taking Physical Inventory

If you’ve chosen to use a periodic system to account for inventories, you need to physically count your inventory at the end of the period. Even with a perpetual system, you should take an annual inventory to be sure the stock listed on your books and what you have on hand is roughly equal. Small differences can be attributed to shrinkage, but large gaps may point to a more serious problem, like ...

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