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Inventory Roll Forward

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Inventory Roll Forward

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.


Dan Ryan
Title: CFO
Company: Privately held
(CFO, Privately held) |

The latter. We do cycle counts daily on an A, B, C schedule and reconcile to perpetual inventory and the GL.

Jane Levin
Title: Corporate Controller
Company: Private
(Corporate Controller, Private) |

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?

David Williams
Title: Staff Accountant
Company: in-between
(Staff Accountant, in-between) |

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 accounting inventory records then perform a comparison to the perpetual records. For our company, both systems are completely separate and do not talk to each other very well.

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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