Inventory Records

If you operate a small retail or service business, a large part of your capital may be tied up in inventory (stock). Keeping control of your inventory involves knowing how much and what kind of stock you have on hand. For more information on inventory management and decision making, refer to ED&T's Managing a Small Business.

There are two main methods for keeping records of your stock: physical inventory and gross margin. Physical inventory involves counting and listing the number and value (both at cost and at retail price) of all items on the premises.

Between physical inventory counts, the gross margin method can be used to estimate the value of inventory. The gross margin method is a less time-consuming and less accurate method of determining stock on hand.