Business and Management
Submitted By jonicstamayo
REVIEW OF RELATED LITERATURE AND STUDIES Review of related literature and studies were conducted which was found to have a great significance to the study are selected and are herein summarized.
Foreign Literature One of the biggest challenges of an enterprise is to maintain the appropriate inventories and control its cost of sales. One businessman states that success in business is more than good products; success depends on assigning and monitoring costs of inventory and applying sound inventory management procedures. (Baysa, 2014 p.203) PAS 2, paragraph 6, defines inventories as “assets which are held for sale in the ordinary course of business, in the process of production for such sale or in the form of material or supplies to be consumed in the production process or in the rendering of services. Inventories are broadly classified in to two, namely inventories of a trading entity and in inventories of manufacturing entity. A trading entity is one that buys and sells goods in the same purchase. The term “merchandise inventory” is generally applied to goods held by a trading entity. A manufacturing entity is one that buys goods which are altered or converted into another form before they are made available for sale. The terms “finished goods”, “goods in process”, “raw materials”, and “factory or manufacturing supplies” refer to inventories of a manufacturing entity.(Valix, 2015 p.478) As described in International Accounting Standards (IAS) 2, paragraph 6, inventories are assets of an enterprise, which are (a) held for sale in the ordinary course of business; (b) in the process of production for such sales; or (c) in the form of materials or supplies to be consumed in the production process or in the rendering of services. Inventories encompass goods purchased and held for resale (merchandise inventory), finished goods produced (finished…...