Principles of proper inventory

Definition of proper inventory

The principles of proper inventory are to be added to the principles of accounting. They include:

completeness

Completeness, according to which all stocks are to be recorded at the end of each financial year and indicated with the correct values in the inventory. The creation of hidden volume reserves is to be prevented.

accuracy

Correctness, ie the respective items are to be recorded correctly according to the type, the quantity and their value.

economics

Economic efficiency, ie all stocks are to be recorded precisely, but only within the framework of what is reasonable. This means that estimates can also be made to a limited extent. So z. B. Stocks of supplies and equipment are estimated if they do not represent a significant part of the inventory.

Materiality

Materiality, ie items of fixed assets with a value of up to € 100 do not need to be included in the inventory (R 31 para. 3 EStR).

clarity

Clarity, ie in the inventory the individual holdings are to be provided with item designations that allow the items to be identified. The inventory is intended to replace the inspection of the inventories that is no longer possible later.

Verifiability

Verifiability, ie the records must be so organized and clear that any expert third party can easily check them.

Timeliness

Timeliness, ie the inventory must be drawn up within a corresponding period of time (Section 249 (2) of the German Commercial Code).

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