What are the Effects of Inventory Errors?

4/1/2016

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How Does this Effect your Financial Statements?

Any errors in merchandise inventory will affect the balance sheet and income statement. Some reasons that inventory error may occur include the following:

Physical inventory on hand was miscounted
Cost were incorrectly assigned to inventory
Inventory in transit was incorrectly included or excluded from inventory
Cosigned inventory was incorrectly included or excluded from inventory

Inventory errors often arise from merchandise that is in transit at year-end. Whether you are selling shirts, hair products, make-up, shoes or books inventory is a key tool to manage your business.

Stay connected with us via the social media platforms (Facebook, Instagram, Twitter - @FontenotSolutions) to learn via examples, more about how inventory errors can effect your financial statements.

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