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Level 2

Inventory vs. non-inventory

Our Comptroller wants everything entered as inventory and nothing as non-inventory. What is the advantage or disadvantage of this?

2 Comments 2
Community Champion

Inventory vs. non-inventory

There could be a few reasons why your Comptroller may want it done this way.  It varies with different companies and the industry they're in.  (So as the Comptroller for the real answer.)


The first reasons that comes to mind to mark things as Inventory is that you want or have to keep track of them.  Depending what these items are, the entire company could come to a halt if an item needed at the beginning of the process was missing.  The company may end up paying all the Personnel to just sit around until they get the parts to start up production again.  Total other side of the coin is that it is an easy way to deter company theft if people know all the Widgets are counted and not just stuck on the shelf when they come in. 


Other big financial reason for doing it is that the Inventory shows up as an Asset.  Non-Inventory items do not.


If you're just trying to get your head around what is an Inventory Item and what a Non-Inventory Item is.  Inventory items are the parts you use to make things to sell or the things themselves you're selling.  A Non-Inventory Item might be the tools you use or maybe the small items you don't care to track like nuts and bolts.


Level 6

Inventory vs. non-inventory

A while back we made a change so that all the little bolts and nuts and stuff like that were non inventory. The burden on taking inventory of all that stuff was just too much. Expense it - be done with it. We are not so big that not having a particular screw for a day will mess up production. GAAP? I'm not sure but I don't care!

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