What should be done if an inventory count reveals a shortage?
There are fewer goods in the warehouse than in the records. What to do without panicking: the steps and the paperwork.
It is the end of the year. The goods at the "Mevali bog'" shop have been counted. The records show 120 boxes of juice, but the warehouse holds 112. Where did the 8 boxes go?
What steps are taken?
- Document the result. The working inventory commission records the count result in the inventory count sheet (report). The sheet is signed by all commission members and by the persons with material responsibility (NAS No. 19, paragraph 16). For items whose count differs from the records, a reconciliation statement is prepared (paragraph 68).
- Find the cause. It may be a recording error, returned goods, spoilage or theft.
- Obtain an explanation from the person with material responsibility. The storekeeper or salesperson gives an explanation. The standing inventory commission reviews the explanations of those responsible for the shortage and makes proposals on settling it (paragraph 9).
- Make a decision. Proposals for settling the differences are submitted to the head of the organisation for review (paragraph 72). If the person at fault is identified, the shortage is charged to them; where no specific person at fault is identified, a shortage above the norms may be written off to production costs and period expenses (paragraph 69).
- Reflect it in the accounts. The shortage is first recorded separately as a loss, and then, depending on the decision, recovered from the person at fault or charged to expenses. The results are reflected in the accounts of the month in which the count was completed (paragraph 70).
What if there is a surplus?
A surplus is also a sign of a problem: a sale or receipt may have been recorded incorrectly. Under paragraph 69 of NAS No. 19, a surplus is taken onto the books and credited to the financial result, after which the causes of the surplus and the persons at fault are identified.
How can shortages be reduced?
- Count inventory more often than once a year, for example every quarter
- Have receipts and issues controlled by two employees rather than one
- Write off spoiled goods immediately with a report
Test yourself
5 questions on this topic: pick an option or reveal the answer.
A stock-take in the warehouse of "Denov meva" LLC found part of the boxes of dried fruit missing. After the investigation no person at fault was identified. Under NAS No. 21, with which journal entry is the shortage recorded?
A stocktake revealed a cash shortage in the cash desk, which will be recovered from the materially responsible employee. What journal entry is made?
An inventory count revealed a shortage of goods, but it is impossible to identify the guilty person. According to the table in para. 412, with which entry is the shortage taken to loss?
A procurement officer of "Qiziltepa tekstil" LLC received an advance of 4,200,000 soums for a business trip. The expense report confirmed spending of 3,650,000 soums; the remainder was not returned to the cash desk, and it was decided to withhold it from wages. How is the deduction recorded?
An inventory count was carried out in the warehouse of "Chirchiq mashinasozlik", and a surplus of domestic equipment requiring installation, not shown in the records, was found. What journal entry is made under NAS No. 21?
Answered: 0 / 50 of 5 correct
All tests →See also
Sources
- NAS No. 19 "Organization and Conduct of Inventory Counts" · paragraphs 9, 16, 68–70, 72: duties of the commission, signing the count sheet, reconciliation statement, settling differences
- Example · prepared by the author