Types of inventory Management

2. GROUP MEMBERS
UMER SAEED
RANA ZEESHAN ALI KHAN
BILAL ARIF
MIRZA ALI HAFEEZ
USMAN

3. FINANCIAL
ACCOUNTING
Inventory systems

4. Inventory
 Inventory is an asset that
owned by the business for
the purpose of selling to the
customer or consumer.

5. Types of inventory
It has two types which are following
► Periodic System
Periodic inventory system useful for
inexpensive goods where need for
accurately tracking inventory does not
exist.
► Perpetual System
Perpetual inventory system provides
detailed record of inventory throughout

6. Periodic System
 In the periodic inventory system the varieties
unlimited.
 Ending inventory is calculated at the end of specific
period and normally one year.

7. Perpetual System
 In the periodic inventory system the
varieties limited.
 Ending inventory is calculated after
each transaction in store ledger card.
 Separate store ledger
 Card is used for each type of matrial

8. Valuation of inventory
First In First Out (FIFO)
- first items purchase will be sold first.
Last In First Out (LIFO)
- last item purchase will be sold first.
Weighted Average (WA)
- make an average cost per unit purchase
of the goods.

9. Income Statement – Periodic System
________________________________________________________
Opening Inventory xxxx
Add:
Purchase xxxxx
Carriage Inward xxxxx
Import Duty xxxxx
xxxxx
(-) Return Outward (xxxx) xxxxx
Cost of Goods Available for sale xxxxx
(-) Closing Stock (xxxx)
Cost of Good Sold xxxxxx

10. Income Statement - Perpetual System
Sales xxx
Less: Cost of Good Sold xx
Less: Inventory Shortage xx xx
Gross Profit xxx

11. Journal Entries for Purchasing of Goods
Transaction Periodic Perpetual
Purchase goods on
credit/cash
Dt Purchase
Cr Trade Creditor/ Cash
Dt Stock
Cr Trade Creditor /Cash
Return Outward/ purchase
return
Dt Trade Creditor
Cr Return Outward/
purchase return
Dt Trade Creditor
Cr Stock
Carriage Inward/ freight-in Dt Carriage Inward
Cr Cash
Dt Stock
Cr Cash
Payment to supplier/ creditor Dt Trade Creditor
Cr Cash
Dt Trade Creditor
Cr Cash