The Company’S Inventory System

The company’s inventory system

Introduction

The permanent inventory system controls the company’s inventory. When tracking incoming and outgoing units, costs and sales, inventory can be monitored continuously. These records are recorded on the administration card or software called Kardex. Each unit has registered commercial assets and its purchases value, acquisition date, output value of each unit and inventory withdrawal date, and always provide the cost of sale of the exact balance of the inventory and value, because it is updated and canknow in real time what inventory you have.

It provides a detailed view of inventory changes, immediately reports the amount of inventory in the warehouse and precisely reflects the availability of materials. It also allows sales and inventory levels to be controlled separately, which helps avoid the lack of stocks. Unless you do not agree with the real amount of the inventory, the company’s accounting staff does not need to adjust the inventory permanently lost, otherwise it will cause loss, damage to the product or theft. 

Developing

Guzmán Vásquez, A., Guzmán Vásquez, D., & Romero Cifuentes states: “This system refers to the methodology adopted by the company through which the value of the inventory and the value of the cost of sales of the company is permanently known. As the assessment of the inventory does not depend on the physical count of the units, the information system must be so efficient and so detailed that it allows, despite the large number of references or product lines that a company can manage, know exactlyHow many units are available for each of the references or product lines, and how much is the total value invested in inventories, at any time, during the accounting period ”.

The permanent inventory system includes continuous records of all inventory changes. Movement from the entrance to the interior. In this way, we can immediately know the gross benefit of the company. The physical inventory of the assets must be carried out at least once a year to maintain the information consistent with the accounting records;In addition, in the system, a method that allows to include the cost of goods, entry and output rates, invoices, purchases and sales must be adopted. 

Accounts involved and types of seats and regularization. To do this, you must keep an individual record in monetary units and values. The accounts involved are: sales;Cost of sales and department stores. This last account is included in the accounts: assets, properties, plant and equipment, structures and buildings and warehouses;The storage account also specifies the amount of goods available for sale on the balance date. To register the purchase of goods in the permanent inventory system, your accountant must debite the amount in the 19% deposit account according to the deductible VAT and prove the total amount to the bank account. 

When the company sells effective, the amount of sales is accredited to the sales account. 19% will be accredited in the VAT account to be paid and the total amount to the banks. It is important that you calculate the cost of the products that the warehouse output sells and records. In accounting terms, this refers to loading the sales cost and paying to the storage account. Account 1435 refers to the goods produced by the company. Is part of group 14: Inventory. The most important part of its description is the second debit value, which records the adjusted surplus value due to the real inventory.

It also specifies in the fourth number: when economic entities use the periodic system, they will register the value of the final inventory at the end of the year. Accounting through a permanent system must be stricter, because the purchase of goods and supplies and raw materials are loaded in the assets of the inventory account;On the other hand, when it comes to returning purchases, it is necessary to affect the inventory account: 4135, and use the inventory the credit number in the account explains it.

Finally, when it is sold, accounting is part of the income and the cost of sales should be considered, because as mentioned above, it is important to know the real cost of each sale. Sales, purchases, merchandise inventory, returns both in sales and purchases, discount in sales and purchases, transport in purchases, cost of sales, gross utility in sales. EXAMPLE: FOR SALE 1.000.000 in merchandise with a profit of 25% the cost of the product. VAT of 19% and retention at the source for purchases of 2.5%.

Accounting: sale, account, debit, credit 1305 (customers), 1.165.000, 1355 (rete source), 25.000, 4135 (sales), 1.000.000, 2408 (VAT), 190.000 costs of sale. Note. In this example the sale price is the cost plus a profit of 25% on the cost. As we don’t have kardex cards, we get the cost by dividing the sale price by 1.25%. Goods are bought by 500.000. VAT of 19% and retention at the source for purchases of 2.5%. Remember that the sales tax paid in purchases is a direct debit that we can deduce from sales sales tax.

So the value payable for the sales tax represents the difference between the value of the credit except the value of the direct debit 2408. The sales tax and the retentions tax, which correspond to the purchasing and sales statements, are recorded by direct fertilizer or debit of the respective account, as well as the purchase statements are handled in the permanent inventory system. Study of the merchandise account. The purchase of goods is a type of transaction within the accounting that focuses on the delivery of several goods by a company for subsequent marketing.

Companies can use acquisition processes to acquire their activities. This type of business, for example, is very present in the business model of retail entrepreneurs, these transactions are transferred in accordance with accounting standards by indicating the amount of purchases (or the price of transaction) at the time in the timethat suppliers receive the goods. In the same way, it also includes the other goods that are still pending and of which the company is responsible for transportation. 

In addition, this provision is counted according to the goods included in subgroups 30, 31 and 32 of the General Accounting Plan. Legal provisions to unsubstantiates. Article 64 e.T. Acceptance of the final stock due to lack of merchandise. In the case of goods easily destroyed or lost, the final inventory units can be reduced by three percent (3%) of the total initial inventory plus purchases. If the occurrence of force majeure or a matching event is demonstrated, major reductions can be accepted.

If the cost of the goods sold is determined by the permanent inventory system, the reductions that occur with easily destroyed or lost goods are deductible if it can be demonstrated that the fact that led to loss or destruction is up to three percent (3%) of the total initial balance plus purchases. ‘The decrease that affects costs excludes the possibility of requesting this value as a deduction’. In this way, it is logical to anticipate that the value assumed as a cost cannot be deduced.

This would lead to a reduction in the tax base of income tax through two (2) different approaches that come from the same economic fact and two cannot be acceptable. Article 63 Decree 2649 of 1993. Inventories. Inventories represent properties, plants and equipment for sale in the normal course of business, as well as those that are in the process of production or that are used or consumed in the manufacture of other items for sale.

‘At the end of the period on which the contingent liabilities of the value are reported. Adjusted inventories must be recognized through the provisions required to adjust them to their net realization value ’. As already mentioned, the provision protects the inventory of aging, damage, deterioration, inventory differentiation, such as loss or other factors that influence market value or make and differ from acquisition costs. However, it should be clarified that taxpayers who use the permanent inventory system.

conclusion

When Law 1111 of December 27, 2006 came into force, which modified article 64 of the ET, they may have some of these values, which cause losses. Or are missing (section 64 (2) ET) as deductible costs in the profit and loss account and not as provisions for expenses. As already mentioned, the provision protects the inventory of aging, damage, deterioration, inventory differentiation, such as: B. Loss or other factors that influence the market or the realization value and deviate from acquisition costs.

However, it should be clear that taxpayers who use the permanent inventory system when Law 1111 of December 27, 2006, which modified article 64 of the ET, entered into force, may have some of these values that cause losses. Or are missing (section 64 (2) Et) as deductible costs in the income statement and not as a provision for expenses.