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Stock verification

Stock verification defined as the physical counting, weighing, ormeasuring the stock materials held and making a record of Thesefigures.It is an annual exercise coincides with the closing ofaccounts. They are raw materials, machinery spares, finished andsemi finished goods. In order to avoid discrepancy in stocks,constant review of stocks, up to date posting, Reconcile thephysical and book balances is of prime Importance. The mainobjective of the verification process is to identify the Weaknesses

in the Operations of the warehousing system. To ensure the input,output and stock on hand accounted for accurately. Ensure properplacement of materials. It HELPS Also to identify slow, non-moving and obsolete items. The purpose is to set up records asthe basis for control and secondly to pass on accountability fromone department to Another. The primary purpose is to assureThat inputs, outputs and the stock on hand have been accountedfor accurately. A careful planning, well organized and executedstock verification Will Give tremendous Advantages to theorganization. Take care to avoid double counting and omittingSome items.

periodic and perpetual

The two types of inventory systems that are common in business are periodic and perpetual.

Both involve tasks or activities that relate to the physical and accounting methods of

reconciliation. The periodic system is somewhat easier, as it only requires for the recording

of financial inventory information on a monthly, quarterly, or annual basis. For example, the

general ledger will include a starting figure for the quarter. Accountants will add the totalinventory purchases for this time period, deduct sales and adjustments, and then present a

final figure on the companys balance sheet.

Physical inventory counts under the periodic method are typically quarterly or annual. More

frequent counts may be necessary if theft occurs, or if a significant number of inventory

products continually wind up damaged going through the companys processes.

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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.

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.

Standard Cost Method

Standard costing and the related variances is a valuable management tool. If a variance arises,

management becomes aware that manufacturing costs have differed from the standard (planned,

expected) costs.

If actual costs are greater than standard costs the variance is unfavorable. An unfavorablevariance tells management that if everything else stays constant the company's actual profit willbe less than planned.

If actual costs are less than standard costs the variance is favorable. A favorable variance tellsmanagement that if everything else stays constant the actual profit will likely exceed the plannedprofit.