Various accounting principles plays vital role in the success of efficient management of inventories of any companies. Inventories are important aspect of the company since it is the one the determines the available raw materials for the production of the organization, or it could be that it determine the available stocks of the company on their warehouses to be distributed to the market (Robertson, 1998). So much with the importance of inventory management, let us now pay more attention on the importance of accounting to inventory management.
Well, the idea of check and balance of accounting could be used by managers assigned in inventory management. Inventories must be checked every now and then depending on the need of the company, the demand and supplies of raw materials must be on balance in order not to affect the operation of the business. Moreover, inventory managers having knowledge in accounting would enables them to determine the allowable level of ending inventories by the end of every period so as to make the financial condition as well as the assets to be stable.
There are also times that there are inventories that are non-taxable, therefore, the inventory manager must know how to present those non-taxable inventories to the accountant of the company. The inventory manager should know this kind of principles in order not for the company to pay too much tax and for the smooth flow of data transfer from one department to another since the inventory manager has to identify first those non-taxable inventories before presenting the report to the accounting division. With this, even simply knowledge in accounting would give companies chances of working things smoothly.
I am not saying that inventory managers have to acquire accounting studies as well. But the mere basic principles of accounting would be just enough for us to perform our responsibilities well and to avoid committing mistakes as to the proper ways of presenting the needed data of various departments of the organization.
- Robertson, L. (1998). Managing Inventory [Electronic Version], 1. Retrieved 9-20-07 from http://www.asashop.org/autoinc/july98/mech.htm.