Accounting

Before the commencement of the importance of internal control during counting of physical inventory. Firstly, it is very pivotal to understand the meaning of internal control. Internal control means that organizations applying and enforcing all those procedures, processes and methods which in the end saved the organization for any type possible mishaps, material losses and failure of the objectives. Internal control assists and enables the top management to take all the possible and corrective measures to issues which creates a hurdle for the management. Internal control also updates the management shrinkage losses, such as theft, spoilage, or breakage of inventory at the end of the fiscal year. Due to internal control, the top management also aware about the inventory management and also management examines the level of inventory at the end of the day or period. In addition, management also assessed inventory is needed during the year and also allocation of direct material and indirect material, availability of inventory in the shape of shrinkage loss, defective inventory, etc (Meigs, 1999).

Management sorts out all the issues related with inventory by proper usage of internal control as well as through inventory management. Internal control is viable for the company because in the end the management of the company is in better position to select the best method to record the purchasing of inventory during the year obviously the method that suits the company. The main objective and theme of internal control regarding inventory management is to match up the physical and actual inventory at the end of the year in terms of companys ending inventory level, finished goods, work in process and cost of goods sold (Meigs, 1999). There are lots of advantages of internal control of inventory like companies fluently continue their production process without any hesitancy because the management of the company is fully aware about the inventory position. The net income and the different ratios like current ratio, working capital ratio, etc of the company stated at the end of the year is unbiased due to effective control on inventory management (Meigs, 1999). So, the companies must emphasis and give importance to internal control procedures specially departments and sections like inventory management because the main objective of the company is to use its available inventory in a best possible way and get the optimum result  from the finished goods.