Inventory in companies and in logistics

During the inventory, the assets of a company are determined on a specific date; in this way, assets and liabilities are specifically identified. Such an inventory is a prerequisite for proper accounting and financial reporting.

The inventory is an important basis for a company’s annual financial statement, which is why the inventory usually takes place at the end of a fiscal year. The German Commercial Code also requires an inventory to be taken at the beginning or end of a commercial activity or in the event of a change of name.

Important: As a rule, the warehouse management system or the inventory management integrated into it is used as an aid for an intralogistics inventory; the monetary valuation of the stocks determined on the basis of the inventory is usually carried out in the ERP system.

The inventory serves as a self-control for the company and provides a certain creditor protection; in addition, it represents a control function for accounting, since the stocks are recorded independently of it. Therefore, a proper inventory is also subject to certain principles, including in particular the following:

  • balance sheet truth (complete inventory)
  • correctness (correct inventory)
  • consistency (regular counting)
  • balance clarity (verifiability of the inventory)
  • individual recording during inventory

If these principles are not adhered to, then the accounting is not properly maintained and the accounting based on it is void.

Inventory items

Tangible assets are counted, measured or weighed during the inventory. Intangible assets, on the other hand, are verified by a book inventory (lists of account balances). Company buildings or, for example, seasonal goods are subject to a decline in value; for such assets, depreciation is taken in the course of the inventory. During this inventory, the assets are compared with the accumulated postings. If there is a discrepancy (inventory difference) between the target and actual stock, the stock determined is considered correct. The inventory differences mentioned must therefore be corrected retrospectively in the accounting records. The differences thus change the operating result by means of a profit and loss statement.