Which of the following is a good inventory storage practice?

• A. Allowing employees to remove inventory without documentation
• B. Placing inventory in random locations to save time
• C. Mixing consigned goods with company-owned inventory without labeling
• D. Storing inventory in a secure, organized area with restricted access

Answer: (D)

Verified step by step guidance

1. Understand the importance of inventory management: Inventory represents a significant asset for a company, and proper storage practices ensure accuracy in financial reporting and operational efficiency.
2. Evaluate the options provided: Each option should be analyzed to determine whether it aligns with good inventory storage practices. For example, removing inventory without documentation can lead to discrepancies, and mixing consigned goods with company-owned inventory can cause confusion in ownership and valuation.
3. Identify the characteristics of good inventory storage practices: These include secure storage to prevent theft or loss, organized placement to facilitate tracking and retrieval, and restricted access to ensure accountability.
4. Compare the correct answer to the options provided: The correct answer emphasizes secure, organized storage with restricted access, which aligns with best practices in inventory management and supports accurate financial accounting.
5. Conclude why the correct answer is appropriate: Storing inventory in a secure, organized area with restricted access minimizes errors, ensures proper documentation, and supports compliance with accounting standards.