Accounting, Payroll & Pension Issues/Obsolete inventory accrual

Advertisement

Expert: - 12/19/2008


Question
We accrue for obsolete inventory every month. Now at year-end we are actually writing off some obsolete inventory to this accrual account. We would like to use the entire accrual. Is it necessary to have an accrual balance on the books at year-end?

Answer
No, I do not believe you do not have to have an accrual balance on the books at year end. The accrual process you are using, meaning the appropriateness of the process, is more important than the year end balances.

If the periodic accruals are okay, then the ending balance should be okay.

Accounting, Payroll & Pension Issues

All Answers

Answers by Expert:

Ask Experts

Volunteer

Arthur Naman

Expertise

General accounting and bookkeeping questions. How to do monthly bookkeeping, how to prepare financial reports. How to reconcile accounts.

I cannot answer questions pertaining to pension or retirement planning.

This is not a forum to have homework answered. Please do your own homework.

Experience

30 years' experience doing tax and accounting work

Education/Credentials
MPA from Univ. of Texas at Austin, MBA Golden Gate Univ, San Francisco CA

©2012 About.com, a part of The New York Times Company. All rights reserved.