What is an Inventory Ledger? How is it Maintained and Organized?

Keeping accurate and organized financial records is crucial for businesses, both for legal obligations and sound management processes. One of the books that form the foundation of these records is the inventory ledger. Commercial businesses, in particular, are required to maintain an inventory ledger to clearly present their assets and liabilities at year-end.

Date: 08 December 2025

Author: Meral İsa

What is an Inventory Book?

An inventory book is an official accounting book that details a business's assets, liabilities, and capital items as of specific dates. According to the Turkish Commercial Code and the Tax Procedure Law, commercial enterprises are required to conduct an inventory at the end of the year, and the results of this inventory are recorded in the inventory book.

This book details all financial elements of the business, such as:

Cash assets,
Commercial goods,
Fixed assets,
Machinery and equipment,
Receivables,
Payables,
Inventories,
Capital structure.

All financial elements such as are included in detail.

Who is Required to Keep an Inventory Book?

In Turkey, the following businesses are required to keep an inventory book:

All businesses with merchant status
Capital companies
Sole proprietorships
Self-employed individuals (in some cases)

However, taxpayers taxed under the simplified method are not required to keep an inventory book.

What is the Purpose of an Inventory Ledger?

An inventory ledger is kept not only because it is a legal obligation but also because it is a critical tool for business management.

Its primary purposes are:

To provide a clear picture of business assets

It clarifies the current status of business assets based on purchases, sales, and expense transactions made during the year.

To display the true profit and loss situation

Information such as which goods and how much remained in inventory at the end of the period, which assets have lost value, and the level of payables and receivables directly impacts the profit and loss account.

To ensure accurate calculation of tax liabilities

Inaccurate inventory equals inaccurate tax returns.

To create financial transparency

It demonstrates the true financial strength of the business to banks, investors, or partners.

It forms the basis of the year-end balance sheet.

An inventory study is always conducted before preparing the balance sheet.

What Are the Types of Inventory?

The evaluation process performed before an inventory ledger is kept can take various forms:

Physical Inventory

This involves counting and recording all products in the warehouse.

Validity Inventory

This involves determining the value of assets (e.g., machinery valuation).

Recording Inventory

This involves comparing accounting records with physical inventory.

Counting and Inventory

This involves counting and recording items individually. At the end of the year, a business completes its ledger by applying all inventory types.

How to Maintain an Inventory Book?

The following processes explain how a business's year-end inventory should be handled.

Counting and Valuing

The first step in maintaining an inventory book is to count and value all of the business's assets.

At this stage:

The goods in the warehouse are counted.
Fixed assets are checked.
A list of machinery and equipment is prepared.
A list of receivables and payables is prepared.
The cash in the cash register is counted.
Bank account balances are obtained.

The actual status of everything is clearly determined.

Creating Inventory Lists

The count results are recorded on separate lists.

For example:

Stock inventory list
Fixed assets list
Receivables list
Payables list
Cash count report
Bank statements

These lists serve as the primary documents for preparing the inventory ledger.

Inventory Book Entry

Entry is made under the following headings:

1. Assets

Commercial goods
Raw materials and supplies
Semi-finished goods
Finished goods
Fixed goods
Machinery and equipment
Vehicles
Bank accounts
Cash balance

2. Liabilities

Suppliers
Bank loans
Cheque and promissory note debts
Debts to partners

3. Capital

Owner-contributed capital
Capital movements during the period

Each item is recorded in terms of quantity, unit price, and total value.

Inventory Book Approval

The inventory book is notarized in the first month of the new year. Businesses that keep their books electronically (e-ledger) generate a certificate through the system.

Things to Consider When Preparing an Inventory Book

To ensure a sound inventory book, the following points should be taken into consideration:

Inventory counts must be accurate: Inaccurate inventory results in incorrect profit calculations and incorrect tax returns.
Depreciation calculations must be up-to-date: This affects the value of fixed assets.
Valuation standards must be adhered to: The Tax Procedure Law (VUK) has different valuation records for each asset.
Undocumented assets must not be recorded: Each asset must match its accounting record.
Debt and receivables reconciliations must be conducted: Reconciliations with companies and banks increase year-end accuracy.
The inventory book must be kept legible and organized: Since it is an official book, scribbling and erasing are inappropriate.

The Difference Between an Inventory Ledger and a Balance Sheet

Many people confuse the terms inventory ledger and balance sheet. In fact, there is a significant difference between the two.

Inventory Ledger:

It is detailed.
Each item is recorded individually.
It includes quantity, unit price, and total value.

Balance Sheet:

It is a summary table.
It shows only the total assets and liabilities.
It is prepared after the inventory work is completed.

In other words, the inventory ledger is the ledger where the raw data for the balance sheet is recorded.

Benefits of Keeping an Inventory Ledger for a Business

Keeping an inventory ledger isn't just a legal obligation. It also offers many advantages for businesses:

It identifies inventory losses: Overstock or understock discrepancies are identified, and corrective action is taken.
It enables accurate profit margin calculations: Inaccurate inventory calculations can distort profit/loss calculations.
It aids business planning: Unsold products, fast-turning products, and needs become clearer.
It provides financial control: The true size of the business is revealed.
It strengthens investor and bank relationships: Regular financial records instill confidence in the business.

Digital Inventory Ledger (E-Ledger) Process

Today, many businesses maintain their inventory in e-ledgers.

Advantages of e-ledgers:

Prevents losses
Easy archiving
Provides rapid reporting during tax audits
Low error rate
Saves time

Businesses with a large number of products can create a more organized structure with e-inventory systems.

Conclusion

The inventory ledger is one of the most important ledgers, recording all assets and liabilities of a business at the end of a period. It is not only a legal obligation but also an indispensable tool for business management.

A well-maintained, accurate, and compliant inventory ledger: