FREE Inventory Templates

Generally, inventory types can be grouped into 8 classifications:

• Raw materials.
• Work-in-process.
• Finished goods.
• Transit inventory.
• Buffer inventory.
• Anticipation inventory.
• Decoupling inventory.
• Cycle inventory.

While stock deals with products that are sold as part of the business’s daily operation, inventory includes sale products and the goods and materials used to produce them. For example, cars, car parts and accessories are sold during normal business practices, but the machines that run diagnostic tests on cars or the car lot itself are not. Inventory takes into account all of the assets a business uses to produce the goods it sells and determines the sale price for the stock. The stock determines the amount of revenue a business generates. The more stock that is sold, the higher the revenues.

Inventory accounting is the body of accounting that deals with valuing and accounting for changes in inventoried assets. A company's inventory typically involves goods in three stages of production: raw goods, in-progress goods, and finished goods that are ready for sale.

Inventory management is a component of supply chain management that involves supervising non-capitalized assets, or inventory, and stock items. Specifically, “inventory management supervises the flow of goods from manufacturers to warehouses and from these facilities to point of sale.”

Here are some of the techniques that many small businesses use to manage inventory:

• Fine-tune your forecasting.
• Use the FIFO approach (first in, first out).
• Identify low-turn stock.
• Audit your stock.
• Use cloud-based inventory management software.
• Track your stock levels at all times.
• Reduce equipment repair times.