Presented To,

SIR KAMRAN

Presented By

ASIF HUSSAIN

Student ID AR524304

Title Page

PERPETUAL INVENTORY

SYSTEM

Introduction of the organizationFounded in 1886, the Coca-cola

company is the world’s leading manufacturer, marketer, and distributor of nonalcoholic beverages, concentrates and syrups.

The company’s corporate headquarters are in Atlanta, with local operations in over 200 countries around the world.

History of the organizationThe Coca Cola company is a global company. In

Pakistan the company started it’s business in 1953. Today the company has a major share in beverage market. The company has its production units at Karachi, Multan, Faisalabad, Rahimyar Khan, Gujranwala, & Lahore.

The company provides a fair amount of employment to local citizens and deeply involved in the life of local communities in which it operates .

Vision mission & values Vision: “To become a market leader in ready to drink

segment while adding best-in-class value to all stakeholders”.

Mission: “ CCBPL exists to refresh the consumers, inspire

moment of optimism through our brands & actions as well as benefits all stakeholders, which we will do with highest social responsibility & with uncompromising commitment towards quality of our products & Integrity in our operation.”

Integrity in our operation.”

Vision mission & values

Values:

We value & respect our people.We communicate openly.We have integrity.We win as a team.We drive quality & innovation.We are accountable.

Introduction to the topicIn business and accounting/accountancy, perpetual

inventory or continuous inventory describes systems of inventory where information on inventory quantity and availability is updated on a continuous basis as a function of doing business.

A method of accounting for inventory that records the sale or purchase of inventory in near real-time, through the use of computerized point-of-sale and enterprise asset management systems. Perpetual inventory provides a highly detailed view of changes in inventory and allows real-time reporting of the amount of inventory in stock; hence, accurately reflecting the level of goods on the perpetual inventory system is intended as an aid to material control

Introduction to the topicUnder the perpetual inventory system, an entity

continually updates its inventory records to account for additions to and subtractions from inventory for such activities as received inventory items, goods sold from stock, and items picked from inventory for use in the production proces.

Perpetual inventory is by far the preferred method for tracking inventory, since it can yield reasonably accurate results on an ongoing basis, if properly managed.

Perpetual inventory system comprises of: (a) Comparison of Bin Cards (quantitative perpetual

inventory) and Stores Ledger Accounts (quantitative-cum-valued perpetual inventory),(b) Continuous Stock-Taking (Physical perpetual inventory)

Introduction to the topic

Advantages:1. Greater control over stock 2. Slow-moving and fast-moving lines of

inventory can be identified. 3. Reordering of inventory is more efficient. 4. Interim profit reports can be prepared

without doing a stock take.5. The level of stock losses or gains can be

measured.

Introduction to the topicDisadvantages:1. Additional record-keeping

Increase workload, increase in staff.2. Additional costs

Staff costs, costs of computer package to maintain inventory records.

3. The need for a physical stock take at the end of the reporting period is not eliminated.

First-in-first-out stock valuation

Assumes that the first inventory purchased is the first inventory sold.

Firms normally try to keep stock moving in line with purchases dates to prevent old items from being shop-soiled, outdated.

Practical study in organizationAccounts system in CCBPLThe Coca Cola Beverages Pakistan has a

centralized management structure in the organization. The top most authority is the COCA COLA Corporate office at Lahore, where all the heads of respective departments are posted. Accounts are being headed by the Chief Financial Officer, who is the in charge off major financial and accounts matters.

At the territory units the officers in charge of the accounts and finance departments are called FINANCE LEADER. At lower level officers are called inventory controllers.

Practical study in organizationInventory Accounting PolicyInventories consist primarily of raw materials

and packaging (which includes ingredients and supplies) and finished goods (which include concentrates and syrups in Coca-Cola Company's concentrate operations, and finished beverages in finished product operations). Inventories are valued at the lower of cost or market. Coca-Cola Company determines cost on the basis of the average cost or first-in, first-out methods(FIFO).

Practical study in organizationThe COCA COLA BEVERAGES PAKISTAN is

currently operating and using the FIFO (first in first out) method for its inventories in the accounts and finance departments. However the actual information of the inventories can not be disclosed and provided here as it is the company’s confidential matter.

First-in-first-out stock valuationFirms normally try to keep stock moving in

Assumes that the first inventory purchased is the first inventory sold.

line with purchases dates to prevent old items from being shop-soiled, outdated.

Inventory DisclosureCoca-Cola Co., Statement of Financial Position, Inventory

USD $ in millions Dec 31, 2012

Dec 31, 2011

Dec 31, 2010

Dec 31, 2009

Raw material & packaging

1,773  1,680 1,425 1,366

Finished goods

1,171  1,198 1,029 697

others 320 214 196 291

inventories

3,264 3,092 2,650 2,354

Item Description The company

Raw materials and packaging

Carrying amount as of the balance sheet date of unprocessed items to be consumed in the manufacturing or production process

Coca-Cola Co.'s raw materials and packaging increased from 2010 to 2011 and from 2011 to 2012.

Finished goods Carrying amount as of the balance sheet date of merchandise or goods held by the company that are readily available for sale.

Coca-Cola Co.'s finished goods increased from 2010 to 2011 but then slightly declined from 2011 to 2012.

Inventories Carrying amount (lower of cost or market) as of the balance sheet date of inventories less all valuation and other allowances.

Coca-Cola Co.'s inventories increased from 2010 to 2011 and from 2011 to 2012.

FIFO - Example

Purchases Sales

Date Lot No Qty Unit cost

Total Date Qty Unit SP

Jan 1 1 50 6.0 300 Jan 4 40 12.0

6 2 50 6.2 310 9 30 12.5

13 3 50 6.5 325 18 20 12.5

24 4 50 6.6 330 31 50 12.9

Total 200 1,265 140

FIFO – Example (Cont’d)Cost of sales Stock on hand

Quantity Unit cost Value Quantity Unit cost Value

50 6.0 300 10 6.5 65

50 6.2 310 50 6.6 330

40 6.5 260 60 395

140 870

SWOT ANALYSIS

Strengths

(1) Easy detection of errors.(2) Better control over stores.(3) Acts as internal check.(4) Early detection of loss of stock.(5) Accurate and up-to-date accounting

records.(6) Availability of correct stock data.(7) Easy to prepare interim accounts.(8) Slow-moving and fast-moving lines of

inventory can be identified.

Weaknesses

1) Many perpetual inventory systems are expensive.

(2) Companies must find accountants who can work the system and manage frequent changes to the general ledger.

(3) Perpetual inventory systems are often time-consuming.

(4) costs of computer package to maintain inventory records.

Opportunities

. New information technology tools can provide quicker data sharing between CCBPL various units.

2. More specializedpersonnels can be hired.3. Data can be accessed from every where of

the world through the technology.4. Frequent updating of records and data

entries can be established.

Threats1. Risk of human error.2. Persistent errors can also cause further

complications.3. Reporting inaccurate inventory figures can

trigger an audit, resulting in potential problems for the company

CONCLUSION

We have discussed our topic THE PERPETUALL INVENTROY SYSTEM in general and with specific reference to the COCA COLA COMPANY. I tried to explain the perpetual inventory system, its nature and uses in the accounts and finance system of business and organization. Organizations like THE COCA COLA COMPANY have large volumes of business and so they require a system of accounts that can be accurate and prompt as well as easy to maintain and manage. However, it is the company’s decision to adopt a suitable system for accounts and finance according to its organizational structure.

RECOMMENDATIONSWe discussed the perpetual inventory system in the COCA

COLA COMPANY. Here are some recommendations for the improvement.

1- A detailed and comprehensive data base must be established.

2- All information should be included in the data base.

3- Competent and qualified personnel should be hired for the accounts management.

4- New advanced technology should be utilized for the accounts management.

5- Untrained staff and inventory officers should be provided with trainings in new approaches of inventory management and data processing.

6- The organization must provide training opportunities to its workers and officers to minimize the factor of human error in data entry in inventories.

DATA COLLECTION SOURCES AND REFERENCE

Web and internet Wikipedia Accounting Tools.(website) Preserve Articles.(website) The Coca Cola Company, official website Staff and members of CCBPL, Sialkot &

Gujranwala