Question

Which of the following is NOT a reason that maintaining an accurate record of products received and sold through inventory management is necessary?

1) To track the availability of products
2) To ensure accurate financial reporting
3) To prevent stockouts and overstocking
4) To reduce the risk of theft and fraud

Answer 1

Maintaining an accurate record of products received and sold through inventory management is necessary for several reasons, including tracking product availability, ensuring accurate financial reporting, preventing stockouts and overstocking, and reducing the risk of theft and fraud.

Maintaining an accurate record of products received and sold through inventory management is necessary for several reasons:

1. To track the availability of products: By keeping an accurate record of products received and sold, businesses can monitor the current stock levels and know when to reorder to meet customer demand.
2. To ensure accurate financial reporting: Accurate inventory records are crucial for financial reporting. They help businesses calculate the cost of goods sold, understand profitability, and report accurate financial statements.
3. To prevent stockouts and overstocking: Inventory management helps businesses avoid stockouts (running out of products) or overstocking (having excess inventory), allowing them to maintain a balance between supply and demand.
4. To reduce the risk of theft and fraud: Accurate inventory records help identify any discrepancies between the physical inventory and recorded inventory, reducing the risk of theft and fraud.