Just wondering how many companies do Inventory roll-forward perpetual inventory as part of their inventory close process. , vs, just pulling perpetual records comparing to the GL and doing Physical counts periodically.
Inventory Roll Forward
Answers
The latter. We do cycle counts daily on an A, B, C schedule and reconcile to perpetual inventory and the GL.
I don't know how you would have any faith in your inventory numbers without full or cycle counts (unless you have very little inventory). I'm wondering if I don't understand your question, though. Are you asking about whether physical inventory is truly necessary to ensure accurate inventory records?
We do periodic cycle counts of the inventory to keep the units honest for replenishment purposes and then a year end physical count for the audit that results in the final inventory journal entry ("shrink"). During month-end closing, we inventory roll-forward the
Because of a 3 week lag in A/P invoices being entered compared to purchases being received in the inventory system, we always have to accrue purchases in order to true up the inventory to the perpetual records.
For a retailer with large inventory, an inventory roll-forward of book to perpetual is very important. You want to be aware of the numbers to accrue for shrinkage before having to book a huge adjustment at year-end.
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