2016-12-30 00:00:00Finance and AccountingEnglishDiscover the purpose of an aged accounts payable report as well as it can improve expense reporting, save your company time, and promote...https://quickbooks.intuit.com/ca/resources/ca_qrc/uploads/2017/03/Man-Explaining-Accounts-Report-Friend.jpghttps://quickbooks.intuit.com/ca/resources/finance-accounting/what-is-an-aged-accounts-payable-report/What is an Aged Accounts Payable Report?

What is an Aged Accounts Payable Report?

1 min read

When you have goods ready for sale, you report the total amount on your finished goods inventory. Your finished goods inventory is a balance sheet account you use when you have inventory in different stages of production. If you make your own goods, you use this financial report alongside your raw materials and in-progress accounts, which report on inventory you haven’t yet started or that still needs work.

Advantages of Finished Goods Inventory Accounts

Because it’s considered a short-term asset for tax purposes, finished goods inventory appears as a current asset on your balance sheet. Tracking your inventory with this financial report helps you better plan for the future, as it lets you estimate how many finished products you have or can have available if you’re going to a trade show, taking items to market, or accepting a large order. Your finished goods inventory also helps you analyse other important information. It differentiates between goods that sell quickly and those that sell slowly, identifies which items need more physical security from theft, and estimates the amount of warehouse space you need to store your products.

Using Finished Goods Inventory as a Liquid Asset

Knowing the products you have on hand also helps if your small business has a cash crisis. These finished items serve as highly liquid assets that are easier to store than raw materials or works in progress. For example, $25,000 of finished inventory plus $15,000 in raw material lets you know at a glance that you have $25,000 of goods you can typically offload more quickly. If you just list the figure as $40,000 in general inventory, you can’t plan ahead as effectively when you’re in a crunch.

Staying on top of your finished goods inventory helps you not only with day-to-day operations but also during planning stages and at tax time. Using accounting software such as QuickBooks Online provides you with a handy way to create financial reports with minimal effort. Keep your books accurate and up to date automatically with Quickbooks to change the way you manage your finances now.

Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

Related Articles

How to Adhere to the Accounting Equation

An aged accounts payable report, sometimes called an accounts payable aging report,…

Read more

What Is the Difference Between Marginal Income and Marginal Income Tax?

A major part of your business is taking in funds. Accounts receivable…

Read more

How to Take on the Role of Your Business Accountant

A chart of accounts represents a defined list of numbers your company…

Read more