How to Use Specific Identification Methods for Inventory Valuation in Viindoo Software

Understanding Specific Identification Method

The specific identification method is a technique of inventory valuation where each item in inventory is identified and valued based on its unique cost. This method is particularly useful when dealing with items that have different costs and can be easily distinguished from each other. For example, if you have a batch of mobile phones with different costs, using a specific identification method allows you to value each phone based on its actual cost.

Here's an example to illustrate how the Specific Identification Method works:

Let's say you own a mobile phone retail store, and you have the following mobile phones in your inventory:

• iPhone X: Cost $800
• Samsung Galaxy S10: Cost $700
• Google Pixel 3: Cost $600
  

On a specific day, a customer purchases the Samsung Galaxy S10 from your store. Using the Specific Identification Method, you would identify the cost of the specific phone sold and assign it to the cost of goods sold (COGS) for that sale. In this case, the COGS for the Samsung Galaxy S10 sale would be $700.

Later on, another customer buys an iPhone X. The COGS for this sale would be $800, reflecting the specific cost of the iPhone X.

If there are any remaining mobile phones in your inventory, the cost of goods sold for each subsequent sale would be determined by the specific cost assigned to each phone at the time of sale.

It's important to note that implementing the Specific Identification Method for mobile phones or any other inventory requires accurate tracking of individual items, such as through unique serial numbers or barcodes. This method can be particularly useful when dealing with high-value or customized mobile phones, limited edition models, or when the cost of different models varies significantly. However, it may become more challenging to apply if you have a large number of mobile phones or if the phones are similar and lack distinguishing features.

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Using Specific Identification Method in Viindoo Software

Viindoo software provides users with an easy-to-use interface to implement specific identification methods for inventory valuation. Here are the steps to follow:

Step 1: Enable Specific Identification Method

First, you need to enable a specific identification method in Viindoo software. This can be done by going to the “Inventory” menu and selecting “Settings”. Under the “Product Categories” option, select “Specific Identification”.

Step 2: Activate a Unique Serial Number for the product

Serial number tracking helps you maintain accurate inventory records. By associating each unit with a unique serial number, you can precisely track the quantities, locations, and movements of individual items. This level of granularity enhances your inventory management capabilities and enables efficient stock control.

Step 3: Record Transactions

After activating a Unique Serial Number for the product, you need to record transactions in Viindoo software. This includes purchase orders, sales orders, and any other inventory-related transactions. Viindoo software allows users to easily record transactions and update inventory levels in real-time.

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• Purchase Transactions: Create a request for quotation, a Receipt button will appear on the view once this purchase order is confirmed:
  

• Press on the Receive Products button then click on Validate to complete the goods receiving and assign serial number.
  

• Click to view detailed information on this journal entry:
  

• Similarly, Creating a Sale quotation, and validating to complete the goods delivery.
  

• At this stage, 01 journal entry is generated on the delivery order.
  

Step 4: Valuation Reports

Viindoo software provides users with detailed valuation reports based on specific identification methods. These reports provide a clear picture of the value of each item in inventory, allowing businesses to make informed decisions.

Benefits of using Viindoo Inventory for your business

Using Viindoo Inventory for specific identification method for offers several benefits, including:

• Accurate Valuation – The specific identification method offers an accurate valuation of inventory based on the actual cost of each item.
• Improved Decision Making – Detailed valuation reports allow businesses to make better decisions related to inventory management.
• Legal Compliance – Accurate inventory valuation is required by law and using a specific identification method ensures compliance.
• Reduced Financial Losses – Accurate inventory valuation leads to reduced financial losses resulting from incorrect valuation.

FAQs

Conclusion

Accurate inventory valuation is crucial for businesses that deal with inventory. Using specific identification methods for inventory valuation offers several benefits, including accurate valuation based on the actual cost of each item, improved decision-making, legal compliance, and reduced financial losses. Viindoo software provides an easy-to-use interface to implement specific identification methods for inventory valuation, making it a valuable tool for businesses of all sizes.

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