Question

1. Define and discuss the several inventory control systems.

2. What is the purpose of inventory?

3. What is the purpose of Internal Controls?

Answer 1

1. An inventory control system is a system the encompasses all aspects of managing a company's inventories; purchasing, shipping, receiving, tracking, warehousing and storage, turnover, and reordering. In different firms the activities associated with each of these areas may not be strictly contained within separate subsystems, but these functions must be performed in sequence in order to have a well-run inventory control system. Computerized inventory control systems make it possible to integrate the various functional subsystems that are a part of the inventory management into a single cohesive system.

Various inventory control systems

1. Perpetual inventory system

2. Periodic inventory system

3. Valuation methods

A. First in first out method

B. Last in last out method

C. Weighted average cost method

2.

The primary function of inventory is to use marketing and production to increase profitability, to get the maximum amount for the business' investment.

The other functions of inventory, such as balancing supply and demand, improving efficiency, establishing a safety stock and geographical specialization.

All of those help to increase a business' profitability

Other purpose of inventory are as follows :-

1. To maintain accuracy and current stock position.

2. To analysis product value in market and meter of flow.

3. For replacement ( reorder) product and future plan.

4. To maintain smooth operation.

5. To consume production cost.

3. Purpose of internal control are as follows :-

A system of internal control is necessary to help employees and other partners understand the attitude and objectives of the organization as a whole. Internal controls provide reasonable assurance to customers and other parties that transactions are recorded properly and in a timely manner. For instance, many consumers have a favorite store because the business is known for providing quality service in a timely manner. In other words, consumers choose to patronize businesses that have good systems of internal control.

These are all the information required to solve the given question.

I hope, all the above mentioned information and explanations are useful and helpful to you.

Thank you.