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

CERTIFICATE
It 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

DECLRATION
I 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: Place:Sultanpur

(Amit Mishra) Roll No. 581125067 Centre Code: 02869

Amit Mishra

S.No. INTRODUCTION SYSTEM ANALYSIS SYSTEM DESIGN REPORTS CODING TESTING SYSTEM SECURITY MEASURES

INDEX

PAGE NO.

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. Mahindra Powerol DG Sets Prompt Service.Low Fuel Consumption The Preferred Choice of Builders. www.mahindrapowerol.com/EnquireNow 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-todate 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 Management analysis, of the lot tracking, cycle with the counting primary support, objective etc. of

inventories,

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 Life We'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."

Conclusion The 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.