Managing Inventory Task

Select a business of your choice, study and evaluate the perpetual inventory system. Explain the accounting process on inventory and discuss how the business uses the information in managing its financial sustainability.

Your discussion should include the following:

• An image of the inventory with some descriptions that include the unit cost price and selling price.
• Create at least 15 transactions related to inventory and enter to inventory card. Indicate and justify the choice of the stock flow assumption used in the business (either First in First out or specific identification method).
• Post the transactions from the inventory card into General ledger. You need to show Inventory Control, cost of goods sold and stock adjustment account.
• Compute and comment on inventory turnover by comparing it with other competitor, industry average or previous period. This includes any concern or actions taken by the business.
• The owner/s discovered that the net realisable value of stocks was lower than the cost price. Discuss how this will affect the stock value in the Balance Sheet with two relevant accounting concepts.
• Analyse the costs and obstacles in the current perpetual inventory system. Provide an evaluation on how the perpetual inventory system assists the business in managing its financial sustainability.