Study Set Content:
are assets that
come from personal savings or were given without
liabilities. Land, buildings, or any tangible goods
become additional investments if they were not
purchased on account or for cash.
Additional Investments
This financial statement shows the changes
that have occurred—in capital, drawings,
and profit—during the period. It aims to
show the Ending Balance of the owner’s
Capital account.
Statement of Changes in Owner’s Equity (SCOE)
These are supporting computations that are
necessary to explain the financial statements.
Stockholders usually find these documents
important since most data are disclosed in the
financial statements.
Notes to the Financial Statements
Errors in Accounting
1. Failure to record one transaction that leads
to an overstated or understated account.
2. Failure to post the transactions in a ledger.
3. A transaction that is journalized or posted
more than once.
4. The debited account and the credited
account are not equal to each other.
5. Inappropriate use of account titles.
6. Inaccuracy in addition or subtraction.
7. Posting entry into another side - debit or
credit.
8. Transposition error (Example: P29,650.00
was written as P29,560.00)
9. Transplacement or slide error (Example:
P20,000.00 instead of P200,000.00)
The stock of products held to meet future
demand/s.
Inventory
The least liquid current asset, given that it
generally cannot be turned into cash until it
is sold to a consumer. Due to the increasing
variety and expense of pharmaceutical
products, the value of keeping and
maintaining an inventory also continues to
rise. Proper management of inventory is
important in order to maintain financial and
operational efficiency in the pharmacy.
Inventory
It consists of merchandise which is available
for sale but is not expected to be sold within
the year.
Inventory
This inventory is included in the
year-end balance sheet as
assets.
“Inventories” constitute items of intangible
personal property which are:
held for sale during the regular course of
business;
❖ in the process of production for such sale;
or
❖ currently used for the production of goods or
services to be available for sale.
4 GENERAL “COSTS”
ASSOCIATED WITH INVENTORY
1. Acquisition
2. Procurement
3. Carrying
4. Stockout/Shortage Costs
can be accurately calculated and are
important to consider in managing a pharmacy’s
finances. These types of inventory may not directly
signify a busy staff but may cause issues in an
organization’s operating margins if they are not
appropriately monitored.
cost of acquisition, procurement, and
carrying
represent the failures in
customer service and, therefore, lost sales. These
costs may be difficult to quantify but definitely have
an impact on any pharmacy.
Shortage costs
can aid in
the financial and operational aspects of a business.
Financially, it can decrease costs in terms of goods
and operational expenses, which results in
increases in gross margins and net profits. Not
having a product when needed may cause the
pharmacy to lose a sale and potentially a customer.
Furthermore, not having the needed product at the
right time may cause physical harm to a patient,
especially in settings (e.g., hospitals) where
life-saving emergency drugs are needed routinely
at a moment’s notice.
effective inventory management
Minimizing inventory investments while being able
to keep up with the supply and demand.
Managing Inventory
Reasons for Inventory
1. to offer a buffer against variations on supply
and demand, often caused by poor
forecasting;
2. to provide better customer service;
3. to foster efficiency;
4. to provide a hedge against price increase by
suppliers;
5. to promote purchasing and transportation
discounts; and
6. to protect the firm from contingencies such
as strikes and shortages.
Inventories allow for both flexibility and control.
Through effective use of inventories, managers
can:
purchase, produce, and ship goods in
economic lot sizes rather than in small jobs.
❖ produce goods on a smooth, continuous
basis even though the demand for the
finished product on raw materials may
fluctuate.
❖ prevent major problems when there is an
error in the forecast of demands or when
there are unforeseen slowdowns or
stoppages in supply or productions.
is the practice of
planning, organizing, and controlling
inventory so that it contributes to the
profitability of the business.
Inventory management
are
to minimize the amount invested in
inventory, and the cost of procurement and
carrying while balancing supply and
demand.
goals of inventory management
is a key factor to the
success of a pharmacy because efficient
inventory management can keep costs
down, increase cash flow, and improve
service. Alternatively, the mismanagement
of inventory can result in an increase of
operating and opportunity costs.
Inventory management
is of vital importance to all
types of pharmacies as it is the pharmacy’s
largest asset.
Inventory Control
