Inventory Accounting
Tracking the financial side of your inventory. Accurate cost of goods sold, proper valuation, and records that match what's actually on your shelves.
What This Is
Inventory accounting is the financial tracking of your physical goods. It goes beyond counting what’s on the shelves. Every time you buy inventory, sell it, adjust it, or write it off, those transactions need to flow correctly into your financial records.
This includes choosing the right valuation method for your business, calculating cost of goods sold accurately each period, reconciling physical counts to book values, and making sure your balance sheet reflects what you actually own. The goal is financial statements that tell the truth about your inventory.
Cost of Goods Sold
Cost of Goods Sold
COGS is the direct cost of the products you sold. Getting this number right is essential for knowing your actual profit margins. We track inventory costs from purchase through sale and make sure they flow correctly into your books when items move.
Valuation and Reconciliation
Valuation and Reconciliation
Inventory on your balance sheet should match reality. We apply consistent valuation methods, reconcile book values to physical counts, and adjust for any differences. Your numbers stay accurate period after period.
Why This Matters
If your inventory records are off, your profit numbers are wrong. COGS drives gross margin. Get it wrong and you don’t know which products make money and which ones lose it. You set prices based on guesses instead of facts. You keep stocking items that quietly drain your cash.
The other problem is shrinkage. Theft, damage, spoilage, receiving errors. If you’re not reconciling inventory regularly, these losses accumulate invisibly. By the time you notice the cash flow problem, thousands of dollars might have already disappeared with no clear explanation.
Margin Miscalculation
Margin Miscalculation
A restaurant owner thinks food costs are 30% but they’re actually 38%. Those 8 points change everything about profitability. Without accurate inventory accounting, you fly blind on the most important number in your business and make decisions based on wrong assumptions.
Undetected Shrinkage
Undetected Shrinkage
A retail shop loses a few items a week to theft. Nothing seems off day to day. Six months later, a full count reveals $15,000 in missing inventory. Proper tracking catches discrepancies early before small losses become major problems you cannot recover from.
What Changes
Your COGS becomes accurate. Your margins become real. You can look at a product category and know exactly what it’s costing you and what you’re making on it. Pricing decisions are based on actual numbers instead of rough estimates or industry benchmarks that may not apply to your situation.
Regular reconciliation becomes part of your routine. Shrinkage gets identified while it’s still manageable. You see how much cash is tied up in inventory and can make smarter purchasing decisions. Slow-moving items get flagged before they become obsolete write-offs sitting in your storage room.
True Profitability
True Profitability
See real margins by product, category, or location. Know which items are worth restocking and which are eating into your profits. Make purchasing and pricing decisions with confidence because you have the numbers to back them up.
Inventory Control
Inventory Control
Track what comes in, what goes out, and what should be there. Catch discrepancies early. Stop the cash bleeding from shrinkage and over-ordering. Your inventory becomes an asset you actually control instead of a question mark on your balance sheet.
The Merrimack Valley's Trusted Accounting Partner
The Next Step:
A 15-Minute Call
Tell us about your business and what you're dealing with. We'll listen, ask a few questions, and give you a straightforward quote.