SESSION-2013-14
PROJECT REPORT
ON
INVENTORY AND ACCOUNT MANAGEMENT SYSTEM
Software Development Project
Submitted for partial fulfillment for
Bachelor of Computer Application (BCA)
Semester-6
Submitted By:-
Amitesh Mishra
Roll No:- 5811250
Inventory and Account Management System
CERTIFICATEIt gives me pleasure to certify that “Amit Mishra” has done the project on
“Inventory and Account Management System” this project is original and
not copied from, any other source.
“I recommend this project report for evaluation. And I wish to prosperous
future.
Date:
Place:
Inventory and Account Management System
DECLRATIONI hereby declare that project report entity “Inventory and account
Management System” written and submitted by under the guidance “Mr.
Faizy Akhter” is my original work.
The empirical findings are based on data collected by myself. While
preparing the report. I have notice from any source or other projects
submitted for similar purpose.
Date: (Amit Mishra)
Place:Sultanpur Roll No. 581125067 Centre Code: 02869
Amit Mishra
S.No. INDEX PAGE NO.
INTRODUCTION
SYSTEM ANALYSIS
SYSTEM DESIGN
REPORTS
CODING
TESTING
SYSTEM
SECURITY
MEASURES
PART CHART
GANTT CHART
FUTURE SCOPE
BIBLIOGRAPHY
An Introduction to Inventory Management Systems
Inventory management systems are central to how companies track and
control inventories. Having the ability to measure inventory in a timely and
accurate manner is critical for having uninterrupted business operations
because inventory is often one of the largest current assets on a company's
balance sheet. Two inventory management systems exist: perpetual
system and periodic system. Each system has its pros and cons, and
companies may choose based on their own needs for inventory control and
available company resources.
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Perpetual Inventory System
The perpetual system uses a permanent inventory account to track
inventory purchases and uses. When a company buys inventories during a
business cycle, the purchase directly increases the balance of the inventory
account. Conversely, when a company sells goods from existing
inventories, the sale directly decreases the balance of the inventory
account. Under the perpetual inventory system, companies are able to
maintain a continuous record of changes in inventory and thus, have up-to-
date information about their inventory holdings at any point in time.
Perpetual System Application
The application of perpetual inventory system relies on the use of a set of
accounting records on related accounts including inventory, cash or
accounts payable, sales and cost of goods sold. Applying the perpetual
inventory system, inventory purchases are debited directly to the inventory
account rather than to the purchase account, while cash or accounts
payable is credited to record the payment. Later when a sale occurs,
companies record the sale and recognize cost of goods sold separately. A
sale is recorded at the selling price with a debit to cash or accounts
receivable and credit to sale. But cost of goods sold is recorded at the
original inventory-purchase cost as a debit, and the inventory account is
credited to show the inventory reduction.
Related Reading: Inventory & Work Order Systems
Periodic Inventory System
The periodic inventory system uses a temporary purchase account, and an
inventory account used only on a periodic basis. When a company buys
inventories during a business cycle, the purchase goes to the purchase
account without affecting the inventory account at the time. Later, when a
company sells goods from the existing inventories, it does not track the
inventory reduction through the inventory account as it occurs, and the sale
also does not affect the purchase account. At the end of a business cycle,
the purchase account is closed and its balance added to the beginning
inventory. To determine the ending inventory balance, companies must
conduct a physical inventory count. Under the periodic inventory system,
companies do not track inventory changes during the period but rather
evaluate their inventory holdings at the period end.
Periodic System Application
The application of periodic inventory system is through the use of both
accounting records and physical inventory count. Applying the periodic
inventory system, inventory purchases are debited to the purchase account
to show new inventory for the period, while cash or accounts payable is
credited to record the payment. When a sale occurs, companies record the
sale but without recognizing cost of goods sold at the time. At the end of a
business cycle, companies compare the amount of physically counted
ending inventory with the amount of beginning inventory, plus the purchase
account balance, to determine the amount for cost of goods sold.
Choosing a System
The perpetual inventory system offers direct measurement of inventory
balance but often requires a computerized system to connect inventory
purchases and sales with the inventory account. On the other hand, the
periodic inventory system does not require setting up a direct link between
inventory purchases and sales and the inventory account, but may not be
able to easily track inventory changes in real time. Companies with limited
business transactions and company resources may consider to adopt the
periodic inventory system for easier implementation. As businesses grow,
the need for tighter inventory control may require the use of perpetual
inventory system for up-to-date inventory information.
Inventory management is a science primarily about specifying the shape
and percentage of stocked goods. It is required at different locations within
a facility or within many locations of a supply network to precede the
regular and planned course of production and stock of materials.
The scope of inventory management concerns the fine lines between
replenishment lead time, carrying costs of inventory, asset management,
inventory forecasting, inventory valuation, inventory visibility, future
inventory price forecasting, physical inventory, available physical space for
inventory, quality management, replenishment, returns and defective
goods, and demand forecasting. Balancing these competing requirements
leads to optimal inventory levels, which is an on-going process as the
business needs shift and react to the wider environment.
Inventory management involves a retailer seeking to acquire and maintain
a proper merchandise assortment while ordering, shipping, handling, and
related costs are kept in check. It also involves systems and processes that
identify inventory requirements, set targets, provide replenishment
techniques, report actual and projected inventory status and handle all
functions related to the tracking and management of material. This would
include the monitoring of material moved into and out of stockroom
locations and the reconciling of the inventory balances. It also may
include ABC analysis, lot tracking, cycle counting support, etc.
Management of the inventories, with the primary objective of
determining/controlling stock levels within the physical distribution system,
functions to balance the need for product availability against the need for
minimizing stock holding and handling costs.
Definition
Inventory management is primarily about specifying the size and placement
of stocked goods. Inventory management is required at different locations
within a facility or within multiple locations of a supply network to protect the
regular and planned course of production against the random disturbance
of running out of materials or goods.
1. The scope of inventory management also concerns the fine lines
between replenishment lead time, carrying costs of inventory, asset
management, inventory forecasting, inventory valuation, inventory
visibility, future inventory price forecasting, physical inventory,
available physical space for inventory, quality management,
replenishment, returns and defective goods and demand forecasting
and also by replenishment Or can be defined as the left out stock of
any item used in an organization Appreciation in Value - In some
situations, some stock gains the required value when it is kept for
some time to allow it reach the desired standard for consumption, or
for production. For example; beer in the brewing industry
All these stock reasons can apply to any owner or product
Special terms used in dealing with inventory
Stock Keeping Unit (SKU) is a unique combination of all the
components that are assembled into the purchasable item. Therefore,
any change in the packaging or product is a new SKU. This level of
detailed specification assists in managing inventory.
Stockout means running out of the inventory of an SKU.[1]
"New old stock" (sometimes abbreviated NOS) is a term used in
business to refer to merchandise being offered for sale that was
manufactured long ago but that has never been used. Such
merchandise may not be produced anymore, and the new old stock may
represent the only market source of a particular item at the present time.
Typology
1. Buffer/safety stock
2. Reorder level
3. Cycle stock (Used in batch processes, it is the available inventory,
excluding buffer stock)
4. De-coupling (Buffer stock held between the machines in a single
process which serves as a buffer for the next one allowing smooth
flow of work instead of waiting the previous or next machine in the
same process)
5. Anticipation stock (Building up extra stock for periods of increased
demand - e.g. ice cream for summer)
6. Pipeline stock (Goods still in transit or in the process of distribution -
have left the factory but not arrived at the customer yet)
., customers' online orders). Procedures and instructions will be coded into
AIS software; they should also be "coded" into employees through
documentation and training. Procedures and instructions must be followed
consistently to be effective.
To store information, an AIS must have a database structure such as
structured query language (SQL), a computer language commonly used for
databases. The AIS will also need various input screens for the different
types of system users and different types of data entry, as well as different
output formats to meet the needs of different users and different types of
information. (Does a job as a financial sleuth sound interesting to you?
Learn more in Uncovering a Career in Forensic Accounting.)
An AIS contains confidential information belonging not just to the company
but also to its employees and customers. This data may include Social
Security numbers, salary information, credit card numbers, and so on. All of
the data in an AIS should be encrypted, and access to the system should
be logged and surveilled. System activity should be traceable as well.
An AIS also needs internal controls that protect it from computer viruses,
hackers and other internal and external threats to network security.
Furthermore, it must be protected from natural disasters and power surges
that can cause data loss. (Learn how you can get a job in this field, read A
Guide To Careers In Accounting Information Systems.)
AISs In Real LifeWe've seen how a well-designed AIS allows a business to run smoothly on
a day-to-day basis or hinders its operation if the system is poorly designed.
A third use for an AIS is that when a business is in trouble, the data in its
AIS can be used to uncover the story of what went wrong. The cases of
WorldCom and Lehman Brothers provide two examples.
In 2002, WorldCom internal auditors Eugene Morse and Cynthia Cooper
used the company's AIS to uncover $4 billion in fraudulent expense
allocations and other accounting entries. Their investigation led to the
termination of CFO Scott Sullivan as well as new legislation. (section 404 of
the Sarbanes-Oxley Act, which regulates companies' internal financial
controls and procedures. (Does a job as a financial sleuth sound interesting
to you? Learn more in Uncovering A Career In Forensic Accounting.)
When investigating the causes of Lehman's collapse, a review of its AIS
and other data systems was a key component, along with document
collection and review and witness interviews. The search for the causes of
the company's failure "required an extensive investigation and review of
Lehman's operating, trading, valuation, financial, accounting and other data
systems," according to the 2,200-page, nine-volume examiner's report.
Lehman's systems provide an example of how an AIS should not be
structured. Examiner Anton R. Valukas's report states, "At the time of its
bankruptcy filing, Lehman maintained a patchwork of over 2,600 software
systems and applications ... Many of Lehman's systems were arcane,
outdated or non-standard."
The examiner decided to focus his efforts on the 96 systems that appeared
most relevant, and the examination required training, study and trial and
error just to learn how to use the systems. (Also check out Case Study: The
Collapse of Lehman Brothers, and An Inside Look At Internal Auditors.)
Valukas's report also noted, "Lehman's systems were highly
interdependent, but their relationships were difficult to decipher and not well
documented. It took extraordinary effort to untangle these systems to
obtain the necessary information."
ConclusionThe six components of an AIS all work together to help key employees
collect, store, manage, process, retrieve, and report their financial data.
Having a well-developed and maintained accounting information system
that is efficient and accurate is an indispensable component of a successful
business.
