Year-end inventory count procedures involve counting and recording all inventory items on hand at the end of a fiscal year or reporting period. This process is important for businesses to accurately determine the amount of goods they have on hand, which in turn, allows them to report correct financial statements.
The purpose of a year-end physical inventory count is to uncover any discrepancies between what is recorded in your records and what is actually on hand. The physical count must be conducted by an employee who is knowledgeable about the company’s inventory tracking system and can accurately verify the items. They must also be familiar with the proper procedures for accounting for missing or damaged inventory items.
During the year-end inventory count procedure, each item should be counted and recorded individually, and special attention should be paid to any discrepancies between what is counted and what is recorded in your books. These discrepancies should be investigated further to ensure that accurate information is being recorded and adjustments are made as necessary.
Once the year-end inventory count procedure is complete, this information can then be used to analyze inventory trends over time, help detect problems with supply chain management, optimize ordering practices, and more.