Accruals

CIOP sessions are conducted by a pool of faculties who also offer the other international certification programs. The typical faculties are having experience between 20 to 30 years in the domains of procurement and supply chain and have a wealth of industry and teaching experience. All of them have great passion for teaching and believes in continuous learning and sharing those learnings. The faculties also go through periodic trainings titled “Faculty Development Programs” to keep them abreast with the latest developments in supply chain and teaching methodologies. Basically, all the faculties are practitioners or consultants who work for the industry and teach supply chain during their spare time or execute this as a project.

Accruals are the adding up of payments or interest over a certain period of time, usually with a specific date in mind, as in financial accounting. It holds special meanings in bookkeeping, where it may refer to an account on a balance sheet which represents liabilities only and non-financial assets used in accruals-based accounting. In supply chain management, accruals are the raw materials used to make the goods and/or services produced by a firm. In inventory management, it refers to the goods in storage waiting for shipment, as well as the machinery and other equipment used to store them.

Accruals are important in accounting since they affect the inventory turnover and cost levels. They are recorded in cost of goods sold (COGS), cost of good produced (COGE) and net change in price (NIC). Inventory turnover, which indicates the number of times products in stock are sold or bought, and average cost per sale, tells part of the story of a firm's profit and loss account. Accruals are affected by the level of production of raw materials, manufacturing, processing, and shipping activities. With inventory accounting systems, firms can record complete information about their inventory, including total stock, end-of-day inventory and the current lot volumes, for a given period. To obtain an accurate picture of stock turnover and costs of goods sold, the accounting system must provide data about the prices of raw materials, manufacturing, processing, and shipping activities.

Accruals are very important in an accounting system, because they represent the value of the firm's assets less its liabilities. Because assets equal liabilities, any deficit in the balance sheet is automatically translated into a deficit in the income statement. The extent to which the firm is able to recover its invested capital and to reinvest it in new activities will affect its financial condition. Inaccruals, also called errors or missed accruals, are therefore a major source of operating risk for most businesses.

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