What are inventories in accounting?

What applies to MPZ

Inventory in the accounting of Russian organizations are those assets that, according to clause 2 of the PBU:

• They are used in the manufacture of goods and materials/performing services as material resources, semi-finished products, and raw materials.
• Intended for resale.
• They are written off as administrative expenses of the company (household equipment, workwear, stationery, etc.).

Depending on the purpose, main and auxiliary supplies, semi-finished products, containers, spare parts, and returnable materials are distinguished. Inventory accounting reflects data on goods and GP (finished products), but excludes information on work in progress (clause 4 of PBU). The main typical accounting entries for inventories are given below.

Subaccounts 10 accounts

PBUs establish a list of certain accounting accounts in the Chart of Accounts that should be used to account for materials in accordance with their classification and item groups.

Depending on the specifics of the activity (budgetary organization, manufacturing enterprise, trade, etc.) and accounting policies, accounts may be different.

The main account is account 10, to which the following sub-accounts can be opened:

The chart of accounts classifies materials according to product groups and the method of inclusion in a certain cost group (construction, production of own products, maintenance of auxiliary production and others, the table shows the most used ones).

Inventory in accounting - current amendments

The Ministry of Finance, in Order No. 64 dated May 16, 2016, introduced changes to the simplified accounting of inventories, or rather to the methods of asset valuation:

1. The supplier's price can be used for purchased inventories - according to clause 13.1, other costs for the purchase of inventories are allowed to be written off in full as normal expenses.
2. The purchase price of inventories for the production of goods and materials is used by micro-enterprises, as well as in the presence of insignificant balances of inventories - according to clause 13.2, other costs for the production/preparation of goods for sale are also allowed to be included in ordinary expenses.
3. The purchase price of inventories spent for management needs is charged to costs in their entirety as they are acquired (clause 13.3 of the PBU).

Note! Let us recall that previously, inventories in accounting using a simplified method were taken into account by organizations at the actual cost, which depends on the option for purchasing inventories.

The innovations do not affect the methods of writing off inventories for production. PBU contains the following options for assessing inventories upon disposal (clause 16):

• Average cost.
• Cost of each unit.
• FIFO.

Accounting for inventories

Accounting for inventories

Inventories make up a significant part of the assets of organizations' balance sheets.
From January 1, 2002, their accounting must be carried out in accordance with PBU 5/01 “Accounting for inventories” (approved by order of the Ministry of Finance of Russia dated 06/09/01 N 44n). The composition of inventories includes:

њљљ raw materials, materials, etc., used in the production of products intended for sale, as well as for management needs; њљљ finished products; њљљ goods. Low-value and wear-and-tear items, previously classified as inventories, are not mentioned in PBU 5/01. Let us recall that assets whose useful life exceeds 12 months, used in the production of products, when performing work (providing services, for the management needs of the organization), are classified as fixed assets (clause 4 of PBU 6/01 “Accounting for fixed assets”, approved by order of the Ministry of Finance of Russia dated March 30, 2001 N 26n). Moreover, regardless of their original cost. In addition to the previously used nomenclature number, the accounting unit of the inventory can be a batch, a homogeneous group, etc. In this case, the selected unit must ensure the formation of complete and reliable information about inventories, as well as proper control over their availability and movement.