1. What is Inventory on Hand?

Inventory on Hand, also known as Ending Inventory, represents the quantity of goods available for sale at the end of an accounting period. It is a crucial metric for inventory management and financial reporting.

2. How Does the Calculator Work?

The calculator uses the basic inventory formula:

Where:

• Beginning Inventory — Inventory available at the start of the period
• Purchases — Additional inventory acquired during the period
• Sales — Inventory sold during the period
• Ending Inventory — Remaining inventory at period end

Explanation: This fundamental inventory equation ensures accurate tracking of inventory movements and helps maintain proper stock levels.

3. Importance of Inventory Calculation

Details: Accurate inventory calculation is essential for financial statements, tax reporting, inventory management, and preventing stockouts or overstocking. It impacts cost of goods sold and gross profit calculations.

4. Using the Calculator

Tips: Enter beginning inventory, purchases, and sales quantities in units. All values must be non-negative integers. The calculator will automatically compute the ending inventory.

5. Frequently Asked Questions (FAQ)

Q1: What if ending inventory is negative?
A: Negative ending inventory indicates an error in recording, as inventory cannot be negative. Check your beginning inventory, purchases, and sales figures.

Q2: How often should inventory be calculated?
A: Typically calculated monthly, quarterly, or annually depending on business needs and reporting requirements.

Q3: What's the difference between periodic and perpetual inventory?
A: Periodic inventory is counted at specific intervals, while perpetual inventory is continuously updated. This calculator uses the periodic method.

Q4: How does this relate to inventory valuation?
A: This calculates quantity. For financial reporting, you also need to apply valuation methods (FIFO, LIFO, weighted average) to determine dollar value.

Q5: What about inventory shrinkage?
A: Shrinkage (theft, damage, obsolescence) should be accounted for separately and would reduce the calculated ending inventory.