What is the purpose of making adjustments in inventory?

Making adjustments in inventory is essential primarily to maintain accuracy in the inventory records. Accurate inventory management ensures that there is a precise understanding of how much product is available, which can significantly affect ordering decisions, shelf management, and overall store operations. When inventory records accurately reflect the actual stock on hand, it allows for better forecasting of product demand, leading to improved stock levels and reduced waste due to spoilage or expired products.

This accuracy also plays a crucial role in financial reporting, helping to provide a clear picture of the business's health and ensuring that resources are allocated effectively. While other aspects like product freshness and sales volume can be influenced indirectly by accurate inventory management, maintaining the correctness of inventory records is the primary objective of making adjustments.