Tuesday 29 January 2019

types of supplies in accounting

Basically every company in carrying out the activities of organizational need to hold inventory to be able to guarantee the survival of his business. In order to hold the supplies needed some funds to be used for the supply of finance. Because of the required items is not always can be obtained at any time, but through a process that requires a certain grace period to procurement, then every company must be able to maintain a number of supplies optimum. The production was all activities in creating and adding to the usefulness (utility) of an item or service required factors the production.


In accordance with the definitions above, then any results of specific uses and production required the production of factors that support the smooth running of the production.

It was a production of the results obtain as a result of her work that can support an increase in the factors of production, namely land, labor and capital.

From the sense describe earlier, then the inventory can be define as goods that are need in the production process and use in the works of a single company or material acquire or need to be process into the series production process and become final goods produce.

Goods & services

In addition to the above problem occurs if other companies providing supplies of raw materials in quantities much greater than require. The company will issue a number of funds to diversion and the cost of maintenance of the inventory of ingredients Baku. Therefore, companies need to establish inventories of raw materials in order to achieve an optimal amount of quantity of products with minimal costs is possible.

The inventory includes all goods and services that are own by the company and use in the production process or provide services.

It provides a definition of that inventory is as an asset which include the company's goods with a view to sale in a period of normal business or inventory goods that are still in the work of the production process or raw material supplies were waiting for their use in a production process.

Understanding inventory not previously mention, namely the inventory can be define as all the materials are own by companies that are waiting for their use to be use or to facilitate the activities of the production process.

Understanding the inventory is classify according to the type and position of raw materials in the order of the work product.

The Production management of raw materials or goods that may be classify as inventories in order of production processes include:

Preparation of raw materials (Row Material Stock)

Product part or parts Inventory purchase. The supply of materials or auxiliary gear items (Surplus Stock). The preparation of intermediate goods or goods in the process (Work In Process/Progress Stock)

Inventories finished goods (Finished Goods Stock)

So in general inventory can be define as a number of treasures own company which can be either a number of raw materials, parts supplied. To be process into sequences of the series production process and the amount of items. That there is within each process that still requires further processing work in the activities of a number of such materials or workmanship of the goods so prepare to meet the demand for subscriptions at any time.

The intent is that the existence of the inventory it will guarantee a smooth production process and consumer needs can be met on time.

In addition, it supplies can also reduce the level of dependency of the company against the supplier. The consumer, meaning that the plant can be cook with regard to development or reordering supplies.

As for the deliberations within the booking raw materials, as follows:

What is the amount of material that must be reserve?

How the large amount of safety supplies on the level of inventory how to do booking reset?

The Fixed Order Quantity System

This system of booking is done if the booking levels have reach a certain limit provide. That the supplies of raw materials and has produce enough to calculate an order has been accept. Which the company must do booking reset (reorder point). The level of the inventory in question was the remaining supplies can reach. The production needs or requests during the grace period (lead time) IE the period of reservation until receipt.

The Fixed Order Period System

The booking system is base on a time-limit that has been set (using the grace period) and calculate the inventory. If the inventory numbers are a very thin out or with the term under a certain amount then. It takes reservations, being the number of reservations every time a message is not the same in volume. Since it must be adjust by the number of remaining inventory.

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