Just-in-Time Accounting: How to Decrease Costs and Increase Efficiency

By Steven M. Bragg | Go to book overview

Chapter 4
Inventory

In an accounting system, inventory is considered to be an asset. Anyone in the logistics department knows better—inventory is a liability that must be minimized at all times. If not, it will rapidly become obsolete, while excess amounts must be stored at considerable expense. Because of these costs, faster inventory transaction processing is a great boon to a company—it allows the organization an accelerated view of the exact status of all inventory items, so that it can reduce them.

This chapter examines the transactions most commonly used to acquire and track inventory, and also reviews a number of techniques for reducing both the cycle time and processing costs associated with inventory transactions.


CURRENT SYSTEM

Inventory transactions begin when the purchasing department orders parts that will eventually be delivered to the warehouse. This process is shown in Exhibit 4.1, along with key control points. The warehouse staff issues a pre-numbered purchase requisition when inventory levels run low. This is the primary authorization for the creation of a multi-part purchase order. One copy of the purchase order goes back

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Just-in-Time Accounting: How to Decrease Costs and Increase Efficiency
Table of contents

Table of contents

  • Title Page iii
  • Contents vii
  • About the Author ix
  • Preface xi
  • Free Online Resources xiii
  • Chapter 1 - Setting Up and Improving the Accounting Department 1
  • Chapter 2 - The Sales Cycle 25
  • Chapter 3 - Cash 69
  • Chapter 4 - Inventory 87
  • Chapter 5 - Accounts Payable 139
  • Chapter 6 - Cost Accounting 183
  • Chapter 7 - Payroll 211
  • Chapter 8 - The Budget 245
  • Chapter 9 - Closing the Books1 271
  • Chapter 10 - Data Collection and Storage Systems 297
  • Chapter 11 - Process Documentation 317
  • Chapter 12 - Change Management 337
  • Index 349
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