The inventory ledger keeps track of details for each type of inventory item. It is interlinked with an inventory controlling account in the general ledger to track inventory balances and determine costs of sales and profits. The inventory account is affected when items are acquired, sold, or returned. Maintaining the inventory ledger involves selecting inventory items from the maintain menu and filling in key information like the inventory ID, related general ledger accounts, cost flow method, and minimum stock level.

1. …CONTINUED –
MAINTAINING
INVENTORY LEDGER
MAINTAINING
INVENTORY LEDGER

2. 2
Overview – Inventory Ledger
 Inventory ledger is maintained to keep track of
details of each inventory type.
 Inventory accounts maintained in a subsidiary
ledger should be interlinked with a given ‘inventory’
controlling account in the general ledger.

3. 3
Inventory records help to determine:
 Automatic inventory balances after each transaction;
 To determine cost of sales of each sales transaction;
 To determine gross profit of each transaction, etc.

4. 4
…continued
Inventory account may be affected in
connection with the following cases:
 When inventory items are acquired;
 When inventory items are sold;
 When inventories acquired are returned;

5. 5
Maintaining Inventory Ledger
 Similar to other
subsidiary ledger
cases, inventory
ledger can be
maintained by
selecting ‘inventory
items’ from the
‘maintain’ menu:

6. 6
…continued
Major information to be filled while maintaining an
inventory item includes:
 Inventory ID and description;
 General ledger ‘sales’ account to be affected
with the specific inventory item (compulsory);
 General ledger ‘inventory’ account to be
affected (compulsory);
 General ledger ‘cost of sales’ account to be
affected (compulsory);

7. 7
…continued
- Cost flow method adopted (FIFO, LIFO,
or weighted average);
- Item class;
- Location;
- Minimum stock;