Continuous and period end inventory records 6 / 10

Inventories held at the year end

The quantity of inventories held at the year end is established by means of a physical count of inventory in an annual counting exercise, or by a 'continuous' inventory count.

In simple cases, when a business holds easily counted and relatively small amounts of inventory, quantities of inventories on hand at the reporting date can be determined by physically counting them in an inventory count.

In more complicated cases, where a business holds considerable quantities of varied inventory, an alternative approach to establishing quantities is to maintain continuous inventory records.

This means that a card is kept for every item of inventory, showing receipts and issues from the stores, and a running total.

A few inventory items are counted each day to make sure their record cards are correct – this is called a 'continuous' count because it is spread out over the year rather than completed in one count at a designated time.

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