Definition
A stock count (physical inventory count) is the process of counting the stock actually held in a warehouse and comparing it with the quantities in the system.
What is a stock count used for?
Differences between the count and the system, called count variances, come from theft, damage, unrecorded movements and data-entry errors. Counts are usually taken at year-end for the auditors and more often for high-value items. Good practice is to snapshot system quantities when the count starts, stop or record movements during it, and recount large differences.
A count variance
Example- System quantity
- 1,200 units
- Counted
- 1,180 units
- Variance
- −20 units at USD 4
Adjustment posted
USD −80
A full count covers the whole warehouse; a cycle count covers a subset. Damaged stock found during a count is usually handled as an inventory write-off.