What is Book Inventory?

Companies use the term “book inventory” to describe the amount of stock which should be on hand, according to the company's accounting records. Discrepancies between book inventory and actual inventory must be accounted for and addressed. Inventory management is a big issue for many large companies and stores, since it can be difficult to track and control large inventories. For retail stores, managing inventories can be extremely challenging, thanks to light-fingered patrons.

Quantities in book inventory are arrived at with the assistance of accounting records, which show when stock was purchased and sold. In a retail store, these accounting records include incoming shipments of supplies and daily sales through the register. In warehouses and wholesalers, book inventory can sometimes be easier to control since the stock area is closed to the public, and stock tends to go out in large lots rather than small individual purchases.

A variety of software programs are designed to help companies track their book inventory. For retailers, these programs usually interface with point of sale systems for registers, inventory check-in programs for shipping rooms, and other business management programs. Every item which enters a business is checked into the computer program, and when an item leaves the company, it is checked back out again. A centralized software program allows stores to instantly check on their on-hand supplies.

Knowing the precise amount of stock on hand is important for a number of reasons. Book inventory is used to calculate the value of a business, for example. It is also used to determine when things should be reordered, and in what quantity. Employees rely on book inventory to tell them if something is in stock or not, so that they can provide it to customers or order it so that it will become available. Bookkeepers usually like to have accurate inventory reports as well, since they use inventory and sales numbers in their financial reports.

Many businesses have systems in place for reconciling book inventory and actual inventory. Some retail stores spend a few days every year manually counting in inventory, for example. More sophisticated systems like RFID tags can also be used to track the movement of inventory, especially in massive warehouses and shipping centers. Employees are also encouraged to report discrepancies if they notice them.