Assignment Report:

Of Accounting;

Perpetual Inventory system in

Coca Cola Beverages Pakistan Limited

Student ID:- AR524304

MBA ( HRM))

Submission Date:.22 /04/2013

SUBMITEDTO :Mr Kamran

Page | 1

SUBMİTTED BY :- ASİF HUSSAİN

[COCA-COLA BEVERAGES PAKISTAN LTD ]

DEDICATION

I want to dedicate this effort of mine to all my teachers, friends and

colleaguess as well as my seniors who have helped me and guided me and I

also dedicate this effort to my family especially father who is a role model

and my guide in every part of my life. I am very thankfull to all of them.

ACKNOWLEDGEMENT

All the praises are for Almighty ALLAH. By the grace of whom, I have completed my

internship successfully.

I would like to acknowledge and extend my heartfelt gratitude to the following persons

who supported me throughout my great experience of the report and provided me moral

support and helped me whenever I needed.

My course instructor, who helped me throughout my report and my semester.

2

[COCA-COLA BEVERAGES PAKISTAN LTD ]

Management of Coca-Cola Beverages Pakistan Limited, Sialkot for providing me

the great opportunity of report and all necessary information and material

regarding my report.

Whom I come to contact during the course of my internship as well as preparation

of this report. I am fortunate to have many excellent seniors and colleagues who

provided much useful advice with their knowledge & experience.

At the end, I am very obliged to my family and friends who were always there by my side

to guide me and gave me courage that I can do the best in my life.

ABSTRACT

In business and accounting/accountancy, perpetual inventory or continuous inventory

describes systems of inventory where information on inventory quantity and availability

is updated on a continuous basis as a function of doing business. Generally this is

accomplished by connecting the inventory system with order entry and in retail the point

of sale system. In this case, book inventory would be exactly the same as, or almost the

same, as the real inventory.

A method of accounting for inventory that records the sale or purchase of inventory in near real-time, through the use of computerized point-of-sale and enterprise asset management systems. Perpetual inventory provides a highly detailed view of changes in inventory and allows real-time reporting of the amount of inventory in stock; hence, accurately reflecting the level of goods on the perpetual inventory system is intended as an aid to material control. It is a system of stock control followed by stores department. The system follows a method of recording stores by which information about each receipt, issue and current balance of stock is always available.

3

[COCA-COLA BEVERAGES PAKISTAN LTD ]

In this study I have tried to explain the term perpetual inventory system in accounting.

For my study of organization I have selected the Coca Cola Beverages Pakistan limited. This is the prestigious organization in beverage industry and a part of a multinational corporation named The Coca Cola International. I tried to explain the accounts system in Coca Cola Company with reference to Perpetual Inventory System.

I am sure that this effort of mine will be a source of knowledge for all of us.

INTRODUCTION OF ORGANIZATION BUSINESS SECTOR

There are four key economic business sectors:

Primary sector: - Engaged in raw material extraction such as mining and farming.

Secondary sector: - Involves refining, construction and manufacturing.

Tertiary sector: - Deals with services such as law and medicine and distribution of manufactured goods

Quaternary sector: - Relatively new type of knowledge industry focuses on technological research, design and development such as computer programming and biochemistry.

According to the above scenario, CCBPL falls in the secondary sector as the main function of CCBPL is manufacturing soft drinks to refreshes its customers.

Beverage:-

“A liquid made up of particular ingredients to develop the taste and refreshment is known as beverage.”

Beverage Industry in Pakistan:

Pakistan beverage industry has the international names offering the best quality

beverages across the country. It is an industry in which players continuously innovate, in

order to come up with better products as compared to the competitors to gain more

consumers and satisfy the existing consumers. Now-a-days beverages become an

4

[COCA-COLA BEVERAGES PAKISTAN LTD ]

important part of the lives of people as it is a consumer consumable good. Usage of soft

drinks is become a trend now a days.

Introduction

Internationally:

Coca-Cola laid the foundation of the beverage industry when it was formed in May 1886

in Atlanta. However it was not until 1895 that the idea of selling coke in bottles was

introduced. With the passage of time Coca-Cola gained popularity and its product began

to get recognized internationally. Thus from its mere beginning in 1886 Coca-Cola has

now been transformed into a strong multinational with its product being currently

recognized all over the world. Coca-Cola, in fact, has now become one of the most

famous and widely consumed brands in the world. It has not only established its footings

in the beverage industry but is currently heading the list of the most financially sound

companies in the world

Pakistan:

The Coca-Cola Company is a global company with some of the world's most widely

recognized brands, the Coca-Cola business in Pakistan has completed its 50 years of

operation. The beverages are produced locally, employing Pakistani citizens. And their

product range and marketing reflects Pakistani tastes and lifestyles, and they are deeply

involved in the life of the local communities in which they operate.

5

[COCA-COLA BEVERAGES PAKISTAN LTD ]

Mr. John Seward is the current of CCI at CCBPL plants in Pakistan. The Coca Cola

international was established in Atlanta in 1886. Currently Coca Cola international is

conducting its operations in more than 200 countries around the world. The numbers of

employees who are working with Coca Cola international are 92,400 worldwide. In

Pakistan CCBPL is conducting its operations from last 58 years. In Pakistan, CCBPL

started its business in 1953. CCBPL stands for Coca Cola Beverages Pakistan ltd.

VISION

“To become a market leader in ready to drink segment while adding best-in-class value to all stakeholders”

MISSION

“Coca-Cola Pakistan exists to refresh the consumers, inspire moments of optimism through our brands and actions as well as benefit all stakeholders, which we will do with highest social responsibility and with uncompromising commitment towards quality of

our products and integrity in our operations”

VALUES

We value and respect our people We communicate openly We have integrity We win as a team We drive quality and innovation We are accountable

6

[COCA-COLA BEVERAGES PAKISTAN LTD ]

PRODUCTS

Coca Cola Beverages Pakistan has the following brands in different packs for the convenience of its customers in Pakistan.

Brands:

Coca-Cola® Coke Diet® Fanta®

Sprite 3G® Sprite® Sprite Zero®

Two type of juices are also been introduced in Pakistan

Pulpy Orange®

Pulpy Tropical®

Coca Cola Beverages Pakistan has introduced mineral water as well

Kinley®

Competitors:

7

[COCA-COLA BEVERAGES PAKISTAN LTD ]

There are many different competitors in the market but the PEPSI is the main competitor of Coca Cola Beverages. Let’s have a look at the brands of PEPSI which are competing the brands of Coca Cola in the market.

Pepsi® Miranda® Mountain Dew®

7UP® 7UP Zero® Teem®

Pepsi has introduced the following brand to compete the juices of Coca Cola Beverages.

Slice®

Pepsi has introduced mineral water as well to compete the kinley.

Aquafina®

Pepsi has introduced its energy drink in two flavors as well to attract the customers

Sting®

There are other many brand names of different companies which are as follows:

Gourmet, Shezan, Makah Cola, Murree Brewery, Tops etc.

INTRODUCTION TO THE TOPIC

8

[COCA-COLA BEVERAGES PAKISTAN LTD ]

What is Perpetual Inventory System?

The perpetual inventory system is intended as an aid to material control. It is a system of stock control followed by stores department. The system follows a method of recording stores by which information about each receipt, issue and current balance of stock is always available.

The Institute of Cost and Management Accountants of England and Wales, defines perpetual inventory as "A system of records maintained by the controlling department, which reflects the physical movement of stocks and their current balances."

According to Weldon, "Perpetual inventory system is a method of recordings stores balances after every receipt and issue, to facilitate regular checking and obviate closing down of work for stock-taking."

Thus, it is a system of ascertaining current balance after recording every receipt and issue of materials through stock records. An important point which should be kept in mind is that the perpetual inventory is usually checked by a programme of continuous stock-taking. Perpetual inventory means the system of it cords whereas continuous stock-taking means the physical checking of those records with actual stocks. '

Definition of 'Perpetual Inventory'A method of accounting for inventory that records the sale or purchase of inventory in near real-time, through the use of computerized point-of-sale and enterprise asset management systems. Perpetual inventory provides a highly detailed view of changes in inventory and allows real-time reporting of the amount of inventory in stock, hence, accurately reflecting the level of goods on hand.

Investopedia explains 'Perpetual Inventory'

A perpetual inventory system is superior to the older periodic inventory systems because it allows for real-time tracking of sales as well as inventory levels for individual items, helping to prevent stock outs. A perpetual inventory also does not need to be adjusted manually by the company's accountants except to the extent it disagrees with the physical inventory count due to loss, breakage or theft.

9

[COCA-COLA BEVERAGES PAKISTAN LTD ]

From Wikipedia, the free encyclopedia

In business and accounting/accountancy, perpetual inventory or continuous inventory describes systems of inventory where information on inventory quantity and availability is updated on a continuous basis as a function of doing business. Generally this is accomplished by connecting the inventory system with order entry and in retail the point of sale system. In this case, book inventory would be exactly the same as, or almost the same, as the real inventory.

In earlier periods, non-continuous, or periodic inventory systems were more prevalent. Starting in the 1970s digital computers made possible the ability to implement a perpetual inventory system. This has been facilitated by bar coding and lately radio frequency identification (RFID) labeling which allows computer systems to quickly read and process inventory information as part of transaction processing.

Perpetual inventory systems can still be vulnerable to errors due to overstatements (phantom inventory) or understatements (missing inventory) that can occur as a result of theft, breakage, scanning errors or untracked inventory movements, leading to systematic errors in replenishment.

The ESA95 recommends the Perpetual Inventory Method (PIM) for the calculation of the stock of Fixed assets whenever direct information is missing (par. 6.04). The calculation of consumption of Fixed capital can be based on these stocks of assets. Besides net capital stock which appears in the Balance sheets can be derived within a PIM approach. In this paragraph the basic principles of the PIM will be discussed. Using the PIM, gross capital stock is calculated as the sum of gross fixed capital formation in Previous years, of which the service live is not yet expired. In the simplest case it is assumed that the total investment of a particular asset does not deteriorate during the expected service life of that asset and is discarded as a whole after that period of time.

Perpetual inventory system comprises of:

(a) Comparison of Bin Cards (quantitative perpetual inventory) and Stores Ledger Accounts (quantitative-cum-valued perpetual inventory),

(b) Continuous Stock-Taking (Physical perpetual inventory)

(a) Comparison of Bind Cards and Stores Ledger Account

Bin card is maintained by the store-keeper and stores ledger account is maintained by stores accountant. Each item of stores is recorded at these places simultaneously. Normally the balances shown by the two records tally. However, th6re may arise some differences between these two records due to the following reasons:

(i) Omission of an item of store in bin card or stores ledger account.10

[COCA-COLA BEVERAGES PAKISTAN LTD ]

(ii) Wrong posting of an item of store either in bin card or in stores ledger account.

(iii) Arithmetical error in working out their balances. Therefore, the balances of the two records should be reconciled at frequent intervals and correct balances should be drawn.

(b) Physical Stock Verification

The perpetual inventory system is not complete without a systematic procedure for physical verification of stores. The correctness of balances as shown in the bin card or stores ledger account should be verified by means of physical stock verification. Physical stock verification may be conducted in the following two ways:

(i) Periodic stock verification

(ii) Continuous stock verification

(i) Periodic stock verification: It refers to a system where physical stock verification is normally done periodically, i.e., once or twice in a year. Under this method, value of stock is determined by physical counting of the stock on a particular date, usually at the end of the year.

It is a simple and economical method of stock-taking and is adopted in small concerns. This type of verification is good only for the items which do not find place in the perpetual inventory records, e.g., works-in-progress, components and consumable stores at site etc. But there are many limitations of this method. Stores may' be closed down for a few days to facilitate stock-taking. There is possibility of fraud] discrepancy, etc.

(ii) Continuous stock verification: This system comprises of counting and verifying i number of items at random daily throughout the year so that all items of stores are verified several times during the year. Notice of the particular stock to be verified each clay is given to the store-keeper only on the date of actual verification.

As there is an element of surprise check in this system of stock-taking, effective control over the items of stores can be exercised. The system does not necessitate the closing down of the stores to facilitate stock-taking. There is also less possibility of fraud and discrepancy, but the method is expensive and is adopted by big concerns only.

The actual stock of material should not differ from the recorded stock under normal circumstances. But-sometimes differences arise due to the following reasons:

(i) Breakage and wastage of materials due to improper handling.

(ii) Shrinkage and evaporation.

(iii) Losses due to accident, fire, etc.

(iv) Losses arising out of breaking up bulk materials.

(v) Losses due to theft.

11

[COCA-COLA BEVERAGES PAKISTAN LTD ]

(vi) Misrouting in bin card or stores ledger account.

(vii) Over or short-issue.

The application of the Perpetual Inventory Method (PIM) requires estimates and assumptions on threeparameters:service life

2- discard pattern 3- depreciation method

Perpetual Inventory System Overview

Under the perpetual inventory system, an entity continually updates its inventory records

to account for additions to and subtractions from inventory for such activities as received

inventory items, goods sold from stock, and items picked from inventory for use in the

production process. Thus, a perpetual inventory system has the advantages of both

providing up-to-date inventory balance information and requiring a reduced level of

physical inventory counts. However, the calculated inventory levels derived by a

perpetual inventory system may gradually diverge from actual inventory levels, due to

unrecorded transactions or theft, so you should periodically compare book balances to

actual on-hand quantities.

Perpetual inventory is by far the preferred method for tracking inventory, since it can

yield reasonably accurate results on an ongoing basis, if properly managed. The system

works best when coupled with a computer database of inventory quantities and bin

locations, which is updated in real time by the warehouse staff using wireless bar code

scanners, or by sales clerks using point of sale terminals. It is least effective when

changes are recorded on inventory cards, since there is a significant chance that entries

will not be made, or will be made incorrectly.

12

[COCA-COLA BEVERAGES PAKISTAN LTD ]

Balance sheets complete the sequence of accounts, showing the ultimate result of the entries in the production, distribution and use of income, and accumulation accounts.Balance sheets and accumulation accounts form a group of accounts that are concerned with the value of assets owned by institutional units or sectors, and their liabilities at particular points in time and with the evolution of those values over time. Balance sheets measure the values of stocks and are compiled at the beginning and end of the accounting period. On the other hand, the accumulation accounts record the changes in the values of assets and liabilities during the accounting period. They are flow accounts, whose entries depend on the amounts of economic or other activities that take place within a given period of time.In the balance sheets three categories of assets are distinguished:a) non-financial produced assetsb) non-financial non-produced assetsc) financial assets

DIFFERENCES BETWEEN PERIODIC AND PERPETUAL INVENTORY:

Periodic – During the period, the inventory account is not change; thus, it reflects the beginning inventory amount. During the period, each purchase is recorded in the Purchases account. As a consequence, the ending inventory eache period must be measured by physical count, then ”costed” at unit price cost. b. Perpetual - During the period, the Inventory account is increased for each purchase and decreased (at cost) for each sale

ADVANTAGES OF PERPETUAL INVENTORY OVER PERIODIC INVENTORY :

It provides continuous inventory amounts It provides the cost of goods sold amount without the necessity of taking a periodic inventory count. It provides continuing information necessary to maintain minimum and maximum inventory levels by appropriate timing of purchases. It provides continuing information about the quantity of goods on hand at various locations. It provides a basis for measuring the amount of theft. It provides cost of goods sold information needed to record sales at both selling price and cost. It is readily adaptable to use of computers to process quickly large quantities of inventory data.

13

[COCA-COLA BEVERAGES PAKISTAN LTD ]

Perpetual Inventory Journal Entries:

The following example contains several journal entries used to account for transactions in

a perpetual inventory system:

1. To record a purchase of $1,500 of widgets that are stored in inventory:

  Debit Credit

Inventory 1,500  

     Accounts payable   1,500

2. To record $300 of inbound freight cost associated with the delivery of inventory:

  Debit Credit

Inventory 300  

     Accounts payable   300

3. To record a sale of widgets from inventory for $3,000, for which the associated

inventory cost is $1,800:

  Debit Credit

Accounts receivable 3,000  

14

[COCA-COLA BEVERAGES PAKISTAN LTD ]

     Revenue   3,000

Cost of goods sold 1,800  

     Inventory   1,800

4. To record a downward inventory adjustment of $800, caused by inventory theft, and

detected during an inventory count:

  Debit Credit

Inventory shrinkage expense 800  

     Inventory   800

 First-In, First-Out (FIFO) is one of the methods commonly used to calculate the value of inventory on hand at the end of a period and the cost of goods sold during the period. This method assumes that inventory purchased or manufactured first is sold first and newer inventory remains unsold. Thus cost of older inventory is assigned to cost of goods sold and that of newer inventory is assigned to ending inventory. The actual flow of inventory may not exactly match the first-in, first-out pattern.

First-In, First-Out method can be applied in both the periodic inventory system and the perpetual inventory system.

Example

Use the following information to calculate the value of inventory on hand on Mar 31 and cost of goods sold during March in FIFO periodic inventory system and under FIFO perpetual inventory system.

Mar 1 Beginning Inventory 60 units @ $15.00 per unit

5 Purchase 140 units @ $15.50 per unit

15

[COCA-COLA BEVERAGES PAKISTAN LTD ]

14 Sale 190 units @ $19.00 per unit

27 Purchase 70 units @ $16.00 per unit

29 Sale 30 units @ $19.50 per unit

Solution

FIFO Periodic

Units Available for Sale = 60 + 140 + 70 = 270

Units Sold = 190 + 30 = 220

Units in Ending Inventory = 270 − 220 = 50

       

Cost of Goods Sold Units Unit Cost Total

Sales From Mar 1 Inventory 60 $15.00 $900

Sales From Mar 5 Purchase 140 $15.50 $2,170

Sales From Mar 27 Purchase 20 $16.00 $320

  220   $3390

       

16

[COCA-COLA BEVERAGES PAKISTAN LTD ]

Ending Inventory Units Unit Cost Total

Inventory From Mar 27 Purchase 50 $16.00 $800

FIFO Perpetual

Date

Purchases Sales Balance

Units Unit Cost Total Units Unit Cost Total Units Unit Cost Total

Mar 1             60 $15.00 $900

5 140 $15.50 $2,170       60 $15.00 $900

              140 $15.50 $2,170

14       60 $15.00 $900 10 $15.50 $155

        130 $15.50 $2,015      

27 70 $16.00 $1,190       10 $15.50 $155

              70 $16.00 $1,120

29       10 $15.50 $155 50 $16.00 $800

17

[COCA-COLA BEVERAGES PAKISTAN LTD ]

        20 $16.00 $320      

31             50 $16.00 $800

SWOT ANALYSIS

The swot anlysis of the Perpetual Inventory System is as under:

STREGTHS:

Accurate Reporting

Companies often experience more accurate financial reporting with a perpetual inventory system. Accountants update the general ledger after each inventory transaction. This results in a general ledger account that closely mirrors the actual physical inventory on hand. Owners and managers can then make quality decisions based on the accuracy of reporting inventory values. Multiple inventory types also benefit from this method, as accountants accurately track each one through the general ledger.

Electronic Management

Perpetual inventory systems often use electronic methods to record transactions. An example is the barcode system a clothing retailer uses when selling goods. Each scan records data that updates the company's inventory value. Accountants use this information to balance the general ledger. Companies also use the data to order goods using a just-in-time system. Electronic ordering helps to prevent stock outs and lost sales.

WEAKNESSES:

18

[COCA-COLA BEVERAGES PAKISTAN LTD ]

Cost

Many perpetual inventory systems are expensive. The cost for these systems is twofold. The technology necessary to make the system work can be a major capital expense. Updating the system for new changes to the technology is also costly. Training employees to properly use the system is yet another expense. On the administrative side, companies must find accountants who can work the system and manage frequent changes to the general ledger.

Process

Perpetual inventory systems are often time-consuming. Electronic updates to a company's general ledger may result in a need for account reconciliations. Accountants will often spend copious hours each week or month to reconcile inventory. Persistent errors can also cause further complications. Accountants need to correct errors and balance the inventory account prior to closing the company's books. Reporting inaccurate inventory figures can trigger an audit, resulting in potential problems for the company.

Additional record-keeping Increase workload, increase in staff. Additional costs Staff costs, costs of computer package to maintain inventory records.

OPPORTUNITIES

Availability of correct stock data- Correct stock data is readily available for settlement of insurance claims.

Investment in materials kept under control - The investment in materials is kept at a minimum level as the actual stock is continuously compared with the maximum level and minimum level.

Convenience and more demand from the business sector and from the organizations.

THREATS

(a) Loss of interest on capital locked up in stock.

(b) Loss through deterioration.

(c) Risk of obsolescence.

(xi) Employment of specialised staff - Since the work is spread throughout year, whole time specialised staff can be engaged for the purpose.

19

[COCA-COLA BEVERAGES PAKISTAN LTD ]

(xii) Moral check on employees - The system acts as a moral check on the employees working in the stores which increases their efficiency.

PRACTICAL STUDY OF THE ORGANIZATION

Current Organizational Hierarchy Chart

Accounts system in CCBPL

The Coca Cola Beverages Pakistan has a centralized management structure in the organization. The top most authority is the COCA COLA Corporate office at Lahore, where all the heads of respective departments are posted. Accounts are being headed by the Chief Financial Officer, who is the in charge off major financial and accounts matters.

At the territory units the officers in charge of the accounts and finance departments are called FINANCE LEADER. At lower level officers are called inventory controllers.

Finance DepartmentFinance Department is responsible for proper flow of cash and for the controlling of financial assets of the organization. The budget is allocated by TCCEC (The Coca-

20

[COCA-COLA BEVERAGES PAKISTAN LTD ]

Cola Export Corporation) for the period of month or two and finance manager of TCCEC of and on came there to check the financial activities.

Inventory Accounting Policy

Inventories consist primarily of raw materials and packaging (which includes ingredients and supplies) and finished goods (which include concentrates and syrups in Coca-Cola Company's concentrate operations, and finished beverages in finished product operations). Inventories are valued at the lower of cost or market. Coca-Cola Company determines cost on the basis of the average cost or first-in, first-out methods.

Source: Coca-Cola Co., Annual Report

Inventory Disclosure

Coca-Cola Co., Statement of Financial Position, Inventory

USD $ in millions

    Dec 31, 2012 Dec 31, 2011 Dec 31, 2010 Dec 31, 2009 Dec 31, 2008

21

[COCA-COLA BEVERAGES PAKISTAN LTD ]

Raw materials and packaging 1,773  1,680  1,425  1,366  1,191

Finished goods 1,171  1,198  1,029  697  706

Other 320  214  196  291  290

Inventories 3,264  3,092  2,650  2,354  2,187

Source: Based on data from Coca-Cola Co. Annual Reports

Item Description The company

Raw materials and packaging

Carrying amount as of the balance sheet date of unprocessed items to be consumed in the manufacturing or production process. Also includes purchased parts that will be used as components of a finished product.

Coca-Cola Co.'s raw materials and packaging increased from 2010 to 2011 and from 2011 to 2012.

Finished goods Carrying amount as of the balance sheet date of merchandise or goods held by the company that are readily available for sale.

Coca-Cola Co.'s finished goods increased from 2010 to 2011 but then slightly declined from 2011 to 2012.

Inventories Carrying amount (lower of cost or market) as of the balance sheet date of inventories less all valuation and other allowances. Excludes non current inventory balances (expected to remain on hand past one year or one operating cycle, if longer).

Coca-Cola Co.'s inventories increased from 2010 to 2011 and from 2011 to 2012.

22

[COCA-COLA BEVERAGES PAKISTAN LTD ]

Double-entry under the perpetual method

Bought goods for cash

Cash payments

Cheque (butt) Stock control Dr

Cash at bank Cr

Bought goods on credit

Credit purchases

Invoice (original) Stock control Dr

Creditors Cr

Sold goods for cash

Cash receipts

Receipt (copy) Cash at bank Dr

Sales Cr

Cost of sales Dr

Stock control Cr

Sold goods on credit

Credit sales

Invoice (copy) Debtor Dr

Sales Cr

Cost of sales Dr

Stock control Cr

The COCA COLA BEVERAGES PAKISTAN is currently operating and using the FIFO (first in first out) method for its inventories in the accounts and finance departments. However the actual information of the inventories can not be disclosed and provided here as it is the company’s confidential matter.

First-in-first-out stock valuation

Firms normally try to keep stock moving in Assumes that the first inventory purchased is the first inventory sold.

line with purchases dates to prevent old items from being shop-soiled, outdated.

23

[COCA-COLA BEVERAGES PAKISTAN LTD ]

FIFO - Example

Purchases Sales

Date Lot No Qty Unit cost

Total Date Qty Unit SP

Jan 1 1 50 6.0 300 Jan 4 40 12.0

6 2 50 6.2 310 9 30 12.5

13 3 50 6.5 325 18 20 12.5

24 4 50 6.6 330 31 50 12.9

  Total 200   1,265   140  

FIFO – Example (Cont’d)

Cost of sales Stock on hand

Quantity Unit cost Value Quantity Unit cost Value

50 6.0 300 10 6.5 65

50 6.2 310 50 6.6 330

40 6.5 260 60   395

140   870      

24

[COCA-COLA BEVERAGES PAKISTAN LTD ]

Swot Analysis of Perpetual Inventory system in THE COCA COLA COMPANY

We have discussed the inventory system in the COCA COLA COMPANY, let us discuss the swot analysis of the topic very briefly:

Strengths (internal) Weaknesses (internal)

(1) Easy detection of errors.(2) Better control over stores.(3) Acts as internal check.(4) Early detection of loss of stock.(5) Accurate and up-to-date accounting records.(6) Availability of correct stock data.(7) Easy to prepare interim accounts.(8) Slow-moving and fast-moving lines of inventory can be identified.

(1) Many perpetual inventory systems are expensive.(2) Companies must find accountants who can work the system and manage frequent changes to the general ledger.(3) Perpetual inventory systems are often time-consuming.(4) costs of computer package to maintain inventory records.

Opportunities (external) Threats (external)

1. New information technology tools can provide quicker data sharing between CCBPL various units.2. More specializedpersonnels can be hired.3. Data can be accessed from every where of the world through the technology.4. Frequent updating of records and data entries can be established.

1. Risk of human error.2. Persistent errors can also cause further complications.3. Reporting inaccurate inventory figures can trigger an audit, resulting in potential problems for the company

25

[COCA-COLA BEVERAGES PAKISTAN LTD ]

CONCLUSION

We have discussed our topic THE PERPETUALL INVENTROY SYSTEM in general and with specific reference to the COCA COLA COMPANY. I tried to explain the perpetual inventory system, its nature and uses in the accounts and finance system of business and organization. Organizations like THE COCA COLA COMPANY have large volumes of business and so they require a system of accounts that can be accurate and prompt as well as easy to maintain and manage. However, it is the company’s decision to adopt a suitable system for accounts and finance according to its organizational structure.

RECOMMENDATIONS

26

[COCA-COLA BEVERAGES PAKISTAN LTD ]

We discussed the perpetual inventory system in the COCA COLA COMPANY; we also discussed the strengths, weaknesses, opportunities and threats of the workforce demographics. Here are some recommendations for the improvement:

1- A detailed and comprehensive data base must be established.

2- All information should be included in the data base.

3- Competent and qualified personnel should be hired for the accounts management.

4- New advanced technology should be utilized for the accounts management.

5- Untrained staff and inventory officers should be provided with trainings in new approaches of inventory management and data processing.

6- The organization must provide training opportunities to its workers and officers to minimize the factor of human error in data entry in inventories.

DATA COLLECTION SOURCES AND REFERENCE:

1- Web and internet

2- Wikipedia

3- Accounting Tools.(website)

4- Preserve Articles.(website)

5- The Coca Cola Company, official website

6- Staff and members of CCBPL, Sialkot & Gujranwala

27

[COCA-COLA BEVERAGES PAKISTAN LTD ]

28