Question

Why is it important to track inventory from the point of ordering to the point of selling? How would you do this in QuickBooks? Discuss how companies that use a vendor like Amazon to maintain and ship their inventory would account for inventory in QuickBooks. (Computerized Accounting with Quickbooks 2015)

Answer 1

Now a days it is very important for big companies to keep a track of inventories from point of ordering to point of sale so that they can know that they have enough inventory to fulfil the further orders. It also help them to recognise the minimum ordering level for their inventories.

Inventories are recognised under current assets in balance sheet. Big Companies that use vendor like Amazon keeps a proper track on inventory. The inventory received is debited in profit and loss statement and the inventory which is in transit is recorded in credit side of profit and loss statement.