Inventory Accounting System is the whole process and system of accounting changes in inventoried goods with the valuations that a business has not yet sold, and keeping a track of for any changes in the inventories. The Inventory Goods are categorised into three stages: raw goods, in-progress goods, and finished goods that are ready for sale. There are two systems to account for inventory: A Perpetual System – the inventory account is updated after every inventory purchase or sale, and the periodic system, and A Periodic System – the evaluation of inventory occurs only at the end of each accounting period.
Reference Definition by Smallbusiness.chron.com: Inventory Accounting Systems are used to plan and track inventory levels and inventory related activities. One common inventory system is bar code tracking. Each inventory item is tagged with a bar code. As inventory items are brought into a warehouse or moved out of a warehouse, the bar codes are scanned to add to or subtract from inventory. Bar code systems can also be used to track for and account for items as they are moved around in a warehouse. Another type of inventory accounting system is RFID, a new technology that will see expanded use. This type of system, more advanced than bar coding, has a device on each inventory item that emits a signal. Readers can detect the signal and track the inventory. Unlike bar coding, this system can track the actual movement of inventory in real time as it moves around a warehouse.
Related Definitions in the Project: The Logistics Management
