Learn something new every day More Info... by email Inventory
reconciliation is a process where a company balances its
physical inventory with the figures in its accounting books. Two
types of systems are available for reconciling inventory.
Companies can either use a periodic or perpetual inventory
system to conduct this activity. Like the names imply, a
periodic inventory system requires an inventory reconciliation
at several different times a year, such as each quarter; the
perpetual method does not have this requirement as an annual
inventory is sufficient. Under each system, a physical count of
inventory is necessary to compare actual items to the accounting
reports so accountants can make adjustments as necessary. Under
each inventory system, the process starts with the same early
steps. An individual from the accounting department typically
goes out and counts all physical items listed as inventory. A
copy of the book inventory from the computer may help guide the
accountant while counting physical inv