Support Material

1. STOCK TAKING METHODS

NB: Stock = Inventory

Perpetual Inventory System

Involves keeping continuous records or stock items purchased and sold; a comparison of actual stock and records is carried out during stocktake at the end of the accounting period. The availability of stock is easily found by looking at the stock record (a manually prepared card or a spreadsheet record) for the item. This system is generally used for businesses with fewer sales transactions (eg machinery) or as a method of monitoring consumable items. The introduction of bar coding has extended the use of computerised perpetual inventory systems to organisations with high turnovers of stock eg supermarkets.

Physical or periodic inventory system

The physical or periodic (at regular intervals) inventory system requires a stock take to be done at the end of the accounting period because a record of the quantities of stock bought and sold is not recorded. When goods are purchased the value is recorded, as is the amount received when goods are sold but the details of stock are not tracked between stock takes. Stock takes are often conducted at the end or near the end of the financial year ie- 30 June.

2. ALLOCATING RESOURCES

A variety of different methods will be used to calculate the need for business resources, depending on the type of resource. The business may be able to estimate the amount of stationery required over a week or month and order accordingly, but would determine future requirements for assets such as motor vehicles in a very different way. Resources can therefore be acquired on a daily, weekly, monthly, quarterly, biannual, annual or even less frequent basis according to the organisation's needs and requirements

Estimating the future and present requirements of particular resources may involve:

• conducting a regular stocktake or keeping track of inventory using a perpetual inventory system to determine what has been used and what is needed.
• discuss with other staff regarding their requirements
• check requests for equipment/supplies
• forecasting requirements based on what has been used in the past
• identifying urgent and non urgent requirements
• determining the usable life of assets and planning for replacement eg photocopier
• deciding whether to purchase, hire or lease eg some schools lease their larger photocopy machines
• referring to current legislation eg OH&S Guidelines to determine their impact on purchasing eg is ergonomic furniture mandatory, special ventilation may be required with the use of some equipment
• recognising organisational preferences eg the business may have set guidelines on the quality or brand of product that they use

You will also need to be aware of:

• budget allocations and restrictions,
• ordering procedures,
• which personnel have authority to purchase or to delegate resource purchase,
• policy and procedures regarding preferred suppliers or contracted suppliers or the tendering process
  

Remember the A B C of Ordering:

Accuracy: Ensure all data is accurate and complete; give specific description of the resource eg item number, colour, brand, size, cost per item, total cost – as shown in the requisition or request form.

Brevity: Be sure to include relevant and sufficient information so that a decision can be made.

Clarity: State the purpose of your report or memo, present the data clearly and sequentially, use "Plain English" not business jargon.
 

return to Task 5