Inventory Basics

Table of Contents

Inventory is an asset that is intended to be sold or consumed to product finished products in the ordinary course of business. Inventory may not be immediately ready for sales.

  1. Raw materials
  2. Work – in – Process
  3. Finished Goods


Inventory Management

Inventory management is the process of keeping the track of goods from manufacturing till it reaches point of sale and also it involves keeping track of new and returned from entering to exist.


Terms Used in Inventory Management

Stock item


SKU (Stock Keeping Units) – Parts Nos./ Codes

Safety Stock

Reorder Level

Price List – We can set standard rates also

Manufacture & Expiry Date

Dead Stock (Non  using Items)


Inventor/ Stock valuation Methods

The choice of stock valuation methods depends on a number of variable, like the business situation and financial goals of the business organisation.

Cost of Goods sold = Opening Stock + Purchase (During the reporting period) – Closing stock


Different Types (Methods) of Inventory Valuation (Cost of Unsold Goods) :

At Zero Cost – No Commercial value goods

FIFO (First in First Out)

FIFO Perpetual (लगातार) (From When co. Started)

LIFO (Last in First Out)

LIFO Perpetual

HIFO (Highest in, First Out)

Monthly Average Cost

Last Purchase Cost – in Gold

Standard Cost – (Standard Rate > F12 > Standard Rate)


Inventory Management

  1. Inventory Masters (Units of Measure, Stock Groups, Stock Items)
  2. Batch Wise Details
  3. Price List & Levels
  4. Point of Sales (POS)
  5. Tracking of Item wise cost Details
  6. Order Processing
  7. Job Order Processing
  8. Stock Categories
  9. Costing Methods (LIFO, FIFO etc.)
  10. Bill of Materials
  11. Inventory Vouchers
  12. Inventory Reports


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This Post Has 8 Comments

  1. Heena meghwal

    Thank u

  2. Bharti

    This is a very knowledgeable blog.

  3. Swati


  4. Manish


  5. satish

    help full to knowledge gain

  6. Rajveer

    Very knowledgeable to us??


    very informative

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