What is an inventory and what is its purpose?

There is probably no entrepreneur who has not encountered at least once in his professional career the concept of inventory. First of all, the necessity to carry it out stems from the law, butthe inventory is also a very important tool to determine the material and financial components of the company. Thanks to it, we simply know what the state of the warehouse or store shelves is. Depending on what type of business we run, we also use different accounting methods. What are the types of inventory? There are at least a few, but the result is supposed to be one - a detailed report on the state of the company.

Definition of inventory

Let's start with this, what an inventory is. It is a set of coordinated accounting activities aimed at accurately determining the numerical state and value of a company's assets. An integral part of any inventory is also a detailed report indicating any differences between the actual state and that resulting from, for example, accounting records or other documentation. The idea is to establish the actual asset structure and diagnose any problems. A properly conducted inventory may also involve accounting for those responsible for the company's assets. However, the latter case is most often dependent on the will of the entrepreneur himself. How to take an inventory? It is worthwhile to prepare well for it. It is also of great importance to choose the right company providing inventory services.

What does the inventory consist of?

The inventory actually begins at the very moment of choosing the procedure itself. Some companies try to carry it out on their own, outsourcing it to their employees. The inventory of the warehouse then usually proceeds more slowly. It is necessary to appoint a person who will be responsible for coordinating the activities and presenting the final report. This raises a number of challenges and risks due to lack of relevant experience. Other entrepreneurs prefer to use the services of qualified external companies. This solution is safer - there is a good chance that the company providing such services will ensure professionalism and impartiality. The whole activity is based on the systematic counting of the company's components and the annotation of the corresponding values on the pages of the inventory report. It is he who is the basic accounting document, which testifies to properly conducted activities, so you need to do everything to ensure that the whole thing is really reliably counted. What is the inventory? In short - on painstaking counting. It is good to do it reliably, without errors that later need to be corrected.

What is the purpose of the inventory?

Actually, the purpose of a stock-taking is one - it is to precisely determine, by means of an inventory, the actual state of all tangible and financial assets of a company. Instead, we can distinguish at least two reasons for carrying it out.

The first is a simple desire. An entrepreneur can order an inventory when he wants to determine the facts or has doubts about whether violations are occurring in his warehouse or store. Then no deadlines under the Accounting Law apply. It is only up to the guidelines for the task itself to determine the scope and timing of the activities carried out.  The result of such an internal audit should be a report that proves or disproves the assumptions, based on which the entrepreneur ordered inventory.

The second purpose of the inventory is to fulfill the conditions imposed on the entrepreneur by the Accounting Law. Article 26 (1) says that store inventory must be carried out by the last day of each fiscal year. Thus, running a commercial activity, we are obliged by law to conduct inventory of goods. Failure to fulfill this obligation may involve severe financial liability, and this is something that every entrepreneur would certainly prefer to avoid. However, a serious entrepreneur does not regard this obligation as a whip, but as an opportunity to optimize the operation of the company.

Who needs to take inventory?

Of course, not every entrepreneur is forced to carry out inventory. This is precisely specified by the provision of the Decree of the Minister of Finance of 2003 on keeping a revenue and expense ledger. It is the keeping of such a book that conditions the inventory. Another necessary condition is to conduct a business in which the assets of the company consist of trade goods, basic and auxiliary materials. In practice - all trading and manufacturing companies. Although it sometimes happens that also companies offering primarily services should conduct an inventory. On what does such an inventory consist of? The company during intangible production may use so-called auxiliary materials, which give their properties to the final product. Then, too,an inventory is required, although, of course, it is carried out in a narrowed scope concerning only these materials.

What is the penalty for not taking inventory?

Liability for failing to maintain an inventory on time, or failing to do so at all, stems directly from the provisions of the Fiscal Penal Code. There we read about a fine of up to 240 daily rates if someone unreliably keeps an inventory. So it is worth asking yourself not whether to conduct an inventory, but what the inventory is about and how to do it reliably. The right answer will allow you to run your business in peace without incurring unnecessary costs.