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Horngren'S Financial And Managerial Accounting
Found in: Page 357

Short Answer

Discuss some measures that should be taken to maintain control over merchandise inventory.

Measures for inventory control is an interconnected process that starts from inventory procurement and ends with inventory release from the stock.

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Step by Step Solution

Merchandise control

Merchandise control is related to the authorized and controlled accounting system for making purchases and sales. This control ensures merchandise safety, flow record, and wastage reduction.

Measures for taking merchandise control

Following measures are taken to accomplish merchandise control –

a) Merchandise should be purchased from the only approved vendors and with proper authorization.

b) Properly tracking the purchased inventory and checking or documentation and damaged items at the time of delivery.

c) Proper recording of damaged inventory and its removal from the stock.

d) Annual counting of physical inventory to prevent theft, damage, or error.

e) Maintaining a proper record of sold or removed inventory from the stock.

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