Physical Inventory Menu Overview

Physical Inventory Menu

Inventory Physical Inventory Menu

 

Function

Use this menu to gain access to the tasks dealing with physical inventory processing. With these tasks the actual on-hand quantity for each inventory item may be determined as well as verifying the value of your inventory.

 

=> To access this menu...

Select Physical Inventory from the Inventory Control main menu.

 

About the Physical Inventory Tasks

Physical inventory processing is used when first establishing the on-hand counts for each inventory item, and periodically thereafter, depending on the accounting requirements of your business. At a minimum, a physical inventory should be taken once a year to verify the value of the inventory as reported on the company’s balance sheet.

 

In the simplest case, the entire inventory is counted and verified in a single session, and any adjustments are updated to the Inventory Master File after the Physical Inventory Register is printed.

 

When dealing with a very large or complex inventory, you may wish to separate it into groups, as indicated by a cycle code associated with each item. If you do this, physical inventory processing may be performed independently and/or concurrently for each cycle code. This provides you with a great deal of flexibility when performing physical count processing for a very large inventory.

 

A valuable feature of physical inventory processing is the ability to continue operation of the Order/Invoice Processing, Purchase Order, Inventory Control, and other modules during the actual physical counting process. How this is accomplished is explained below. Of course, during the actual counting process, no items should be physically added or removed from the actual inventory.

 

Physical Inventory Selection

The first step in physical inventory processing involves “freezing” the inventory as of a specific date based on warehouse codes and cycle codes. The current on-hand information in the Inventory Master File is the information used. All transactions that physically occurred before the count should be posted to the computer. It is important that your system be completely current before the “freeze” takes place.

 

Cancel Physical Inventory

If incorrect information is selected in the Physical Inventory Selection task, you may cancel this information before proceeding with printing the count sheets. This process will “unfreeze” the inventory if necessary.

 

Physical Inventory Count Sheets

The count sheets are printed after the inventory items are selected for physical inventory processing. They are used as an aid in the actual counting of the inventory.

 

Physical Inventory Count Entry

After the physical inventory is taken and recorded on the inventory count sheets, the actual physical counts are entered using the Physical Inventory Count task.

 

Physical Inventory Register

This register prints all physical inventory counts as entered through the Physical Inventory Count Entry task. It also calculates the count variance between the actual physical quantities on-hand and the inventory quantities recorded as of the “freeze” date. The variance amount is updated to the Warehouse/Item file after the register is printed.

 

The update affects the inventory on-hand quantities only when a variance exists between the system’s record of the on-hand quantity and the actual quantity determined by the physical count. This variance is posted as an adjustment to the Inventory Master File. The update does not make postings to the General Ledger. Any general ledger adjustments must be made using a separate journal entry.



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