Question

: In 2021, Garret Market remained fully open while conducting inventory, but in 2022 Garrett closed during inventory. In 2023, Garrett remained open but sold only a small selection of items during inventory. Based on this information, in which years did Garrett have the most and least accurate inventories

Answer 1

Answer:

The answer is:

• 2022 most accurate inventory
• 2021 least accurate inventory

Explanation:

Garret Market uses a periodic inventory system (updates are made on a periodic basis) and in order to carry out this process correctly, the inventory should remain closed. Only in 2022 was the inventory closed, so it should be the most accurate. In 2021 the store remained fully opened and inventory was modified daily, so it should be the least accurate.

Answer 2

Answer: 2022 would have the most accurate inventory whilst 2021 would have the least accurate inventory.

Explanation:

Based on common Accounting practice, Stock takes are conducted on the first day of a new month or a new Quarter (i.e. April, July, Oct and Jan) or a new year. The intention being to ensure the carrying stock in the company records or the ERP are the same or as close as possible as what is physically in the warehouse.

However, this doesn't preclude stock takes from happening on impulse, irregularly and sometimes limited to specific items of inventory. Where certain occurrences took place within a business, this is likely to be the case. Chief of which is suspected pilferage of stock items by employees, in addition we may consider natural & man-made disasters, identified incorrect recording of stock utilization in production processes etc

In 2021, if most of Garret Market stock in hand are slow moving items, meaning consumption of materials can be predicted albeit the level of consumption is low. It makes sense to continue its operations to generate as much revenue as it can without allowing the stock take exercise squander its chances at profitability.

In 2022, there may have been identified or suspected cases of theft thus necessitating a complete shut down of operations.

Whilst in 2023 it had perfected the art of running both concurrently.

The perfect answer therefore lies in the size and pace of operations of the Business and how it’s able to manage stock takes without disrupting it’s core function of providing consumer goods.