If inventory levels
are insufficient to fill the order, a warehouse employee adjusts the verified stock release
to reflect the amount actually going to the customer. The employee then prepares a
back-order record, which stays on file until the inventories arrive from the supplier
(not shown in Figure 9.14). Back-ordered items are shipped before new sales are
processed.
Finally, the warehouse employee adjusts the stock records to reflect the reduction
in inventory. These stock records are not the formal accounting records for controlling
inventory assets. They are used for warehouse management purposes only. Assigning
asset custody and accounting record-keeping responsibility to the warehouse clerk would
violate a key principle of internal control. The inventory control function, discussed later,
maintains the formal accounting inventory records.