Question

Hi, I'm currently doing an accounting case and I was wondering about this following statement:

"On a tour of CEM's manufacturing facility, I noticed that their facilities have good security with cameras installed that have a view of all of the areas where inventory is stored. THere is a large holding area with various parts, nuts, bolts, and wire coils, etc. THe chief financial officer indicated that CEM keeps these leftover parts and supplies from finished construction projects in inventory "just in case we ever find a use for them. This inventory is set up in our accounting records."

Should the leftover parts and supplies be expensed instead of being put back in inventory? Should they be reported as supplies and not inventory? Please help

Answer 1

As per accounting, dispatch material will be consider as a part of inventory still it is not used in the production or construction etc.. work but such inventory is a part of working material when such material are dispatch for use. then after compliting the project or work whatever the material remain on the site will be a part off inventory not consider as expense.

relevent points are also specified in inventory and stock manangement policy of all organization hence differnt organization can set there own criatarea on the based of their business nature.

(example of stock management policy.)

1.Goods that is unused after the completion of the work or the fulfilment of the purpose for which they were issued, must be returned to the store and must be included in stock

2.Goods Returned Note shall be filled in if stock is returned by the department to the warehouse. The Goods Returned Note shall be prepared by the Responsible Official and signed by the Responsible Manager Periodically

3. The Store man shall acknowledge the receipt of goods from the department by signing the Goods Returned Not Periodically