Inventory Reconciliation Definition
Inventory reconciliation is the process of comparing the inventory records of a company with the actual physical count of inventory on hand. This comparison is used to determine the accuracy of the company’s inventory records and to correct any errors that may have occurred.
The inventory reconciliation process begins with a physical count of the inventory on hand. The count should be conducted by someone who is not familiar with the company’s inventory records, in order to avoid any potential biases. Once the physical count is complete, it should be compared to the company’s records of what should be on hand.
If there are any discrepancies between the two, an investigation should be launched to determine where the error occurred and how to correct it. This may involve looking at purchase orders, sales records, and other documentation to try to identify where the error took place. Once the error has been found and corrected, the inventory records should be updated accordingly.
The inventory reconciliation process is an important part of maintaining accurate records for a business. It helps to ensure that inventory levels are accurately reflected in the books, which can impact everything from financial reporting to tax liability.
