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FINANCIAL ACCOUNTING

INVENTORY MANAGEMENT

INTRODUCTION

In business and accounting / accountancy, perpetual inventory or continuous inventory describes


systems of inventory where information on inventory quantity and availability is updated on a
continuous basis as a function of doing business.

A method of accounting for inventory that records the sale or purchase of inventory in near real -
time, through the use of computerized point -of-sale and enterprise asset management systems.
Perpetual inventory provides a highly detailed view of changes in inventory and allows real-time
reporting of the amount of inventory in stock; hence, accurately reflecting the level of goods on
perpetual inventory system is intended as an aid to material control.

Under the perpetual inventory system, an entity continually updates its inventory records to
account for additions to and subtractions from inventory for such activities as received inventory
items, Goods sold from stock, and items picked from inventory for use in the production process.

PRACTICAL STUDY IN ORGANIZATION

INVENTORY ACCOUNTING POLICY

Inventory consists primarily of raw materials and packaging (which includes ingredients and
supplies ) and finished goods (which include concentrates and syrups in coca - cola company's
concentrate operations, and Finished beverages in finished product operations ).

Inventories are valued at the lower of cost or market. Coca-Cola company determines cost on
the basis of the average cost or first -in, first - out methods ( FIFO).

FIRST - IN- FIRST OUT STOCK VALUATION

Firms normally try to keep stock moving in assumes that the first inventory purchased is the
first inventory sold.

Line with purchases dates to prevent old items from being shop-soiled , outdated.
INVENTORY DISCLOSURE

Coca-Cola Co., statements of Financial Position, Inventory

USD $ in millions

Dec. 31, 2012 Dec. 31, 2011 Dec. 31, 2010 Dec. 31, 2009
Raw material & 1773 1680 1425 1366
packaging
Finished goods 1171 1198 1029 697
Others 320 214 196 291
Inventories 3264 3092 2650 2354

Items Description The company


Raw materials and packaging Carrying amount as of the Coca-Cola co.'s raw materials
balance sheet data of and packaging increased from
unprocessed items to be 2010 to 2011 and from 2011 to
consumed in the manufacturing 2012
or production process
Finished goods Carrying amount as of the Coca-Cola co.'s finished goods
balance sheet data of increased from 2010 to 2011 but
merchandise or goods held by then slightly declined from 2011
the company that are readily to 2012
available for sale.
Inventories Carrying amount(lower of cost Coca-Cola co.'s inventories
or market) as of the balance increased from 2010 to 2011
sheet data of inventories less all and from 2011 to 2012
valuation and other allowances
FIFO EXAMPLE

Purchase Lot No. Qty. Unit cost Total Sales Qty Unit S.P.
dates Dates
Jan 1 1 50 6.0 300 Jan 4 40 12.0
6 2 50 6.2 310 9 30 12.5
13 3 50 6.5 325 18 20 12.5
24 4 50 6.6 330 31 50 12.9
Total 200 1265 140
LEARNING

We have discussed our topic THE PERPETUAL INVENTORY SYSTEM in general and with
specific reference to the Coca company. I tried to explain the perpetual inventory system, its nature
and uses in accounts and finance system of business and organization.

Organizations like THE COCA-COLA COMPANY have large volumes of business and so
they require a system of accounts that can be accurate and prompt as well as easy to maintain and
manage.

However, it is company's decision to adopt a suitable system for accounts and finance
according to its organizational structure .

SOURCES AND REFERENCE

Web and Internet

Wikipedia

Accounting Tools

The Coca-Cola company, official website

Preserve Articles

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