culling the merchandise

Inventory represents a large part of the company’s assets, as it represents a ratio of 30:40 % of the company’s total investments, and sometimes more, and because inventory also has a significant impact on
1- The number of business “sales volume” according to the policy of the facility in keeping the stock and the minimum order and when we implement the purchase orders
2- Business result as the method of inventory valuation affects the business result of the enterprise from profit or loss, if the company changes the pricing method for inventory
Goods are destroyed as a result of damage to the warehouse - and the types of inventory damage are:
1- Natural damage
2- Contrived damage, whose cause is known or whose cause is unknown
Stock damage is a more general term than damage. In the same word, there is an intention in the work and there is a cause
Damage may be the result of one of the following reasons.
1- 'Expiry': The term EXPERD is used as in the pharmaceutical sector, pharmaceutical companies and factories.
2- Obsolescence: as in companies that work in the field of technology, so that the system becomes non-interactive, incompatible, or of lower quality or efficiency for work requirements.
3- Manufacturing defects: in some cases, poorly manufactured products often appear and may be damaged before even use, as is the case with inks that dry out in warehouses.
4- Atmospheric factors: foodstuffs are often damaged as a result of poor storage, high temperatures or high humidity in stores.
5- Power outages: For example, in the event that major companies and major factories do not use electrical power transformers and generators and UPSs, in the event of a sudden power outage, orders under operation may be damaged, as in candy factories or tahini factories.
6- Fire: caused by negligence, high electric current, short circuit, or the use of stoves in warehouses
7- Rodents: Some agricultural crops are often damaged during storage by rodents such as mice and others
8- Neglect and misuse: Neglect appears either in the damage during the handling process or during the distortion or intentional breakage or damage by one of the employees or unintentional damage or the use of some damaged transport and handling devices that may lead to injury to employees during their work.
9- A failure in one of the departments: the administrative insufficiency and the failure to take all precautions and insure the stores and insure them with insurance companies against drowning during import from abroad and the fire inside their stores.
10- Collusion: cheating by suppliers or collusion by warehouse employees or the procurement department when executing the purchase order by contracting for high quality products and upon delivery, inferior or poorly manufactured products are delivered or the warehouse keeper receives broken or damaged goods
11- Other reasons beyond the control of warehouse management, such as chemical reactions that sometimes occur to raw materials or volatility.
12- Lack of coordination: between the different departments and departments and the lack of cooperation. For example, as a result of the lack of coordination between the procurement department and the warehouse department, the department implements an order that is not needed, as soon as it feels like carrying out its most important tasks as management.
13- Decentralization of decision-making: For example, in order for the procurement department to obtain the best price from the supplier, it is obliged to implement in a certain quantity.
14- The warehouse management and the warehouse monitoring did not carry out the tasks entrusted to it and did not close the windows or close the coolers during the summer.
15- Lack of assistance from the warehouse management: failure to provide the procurement department with warehouse reports, which are to reveal needs and deficiencies, stagnation report, and synergy report
…………………………………………………………………………………………………………………………………….
Accounting treatment:
………………
In case of normal damage:
……………………………..
—- Permissible part: It is usually from 0.5 % to 1.5 %, depending on the type of activity and varies from one producer to one product or raw material to another and it is charged to the operating account in the manufacturing operations in factories and the trading account in commercial companies
from h / trading
to mentioned
H/ Permissible damage
H/ Permissible disability
Proof of stock shortage
From h/ permissible damage or disability
to h / stock
—- What exceeds the normal rate of loss, damage or deficit: it is charged to the profit and loss account within other expenses, or the loss or damage of raw materials and goods
from h / a.kh
To h/ abnormal or impermissible damage
Damage, drowning, burning, shortage or disability
The inventory is reduced by the value of the deficit or damage as follows
From h / damage is not allowed
to h / stock
In the event of deliberate damage, and the culprit is known:
………………………………
The goods or raw materials are evaluated and deducted or loaded from the culprit or the responsible in the event that the real culprit is not known, in return for his negligence and weakness of the internal control system
Who is responsible for or responsible for the damage or disability?
To h/ stock “ores or merchandise”
And upon payment or deduction from the one who is responsible or liable for the damage or disability
from h/ cash
To H / responsible for the deficit and damage