Question

Sally is the lead nurse in your organization and she works hard to ensure that all medications are not only properly secured, but also shelved in a manner that allows for the oldest (yet not expired) medications to be position at the front part of the shelf (so the newer medications with a longer shelf life are put behind the older medications).

Over time, a specific medication in this cabinet has significantly increased in purchase price by the pharmaceutical organization/vendor. As a result, the inventory valuing and costing figures will not be the same anymore. Inform nurse Sally that while in her mind the medication bottles are all the same, from an accounting perspective, they are not.

Answer 1

Sally is dealing with the medication and shelf them according to the expiry date/oldest date. In accounting, the inventory is differentiated according to the purchase price. If the purchase price changes, we have to put the inventory of the medicine in a different sub-category. We can account the purchase of each and every purchase price of the medicine inventory in one.

Sally can shelf one group of medicine in the cabinet according to the oldest in front of newest inventory, but in accounting we have to put each inventory of medicine with different purchase price in new sub-category.

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