When goods are manufactured for resale, the invoice prices of the raw materials, along with any costs pertaining to the procurement and receipt of the materials, should be recorded as manufacturing inventory (FAS inventory account control 1500-1539) in the general ledger (Ledger 0). Upon the sale of a finished item to a user, the cost of the materials and any related costs are transferred from the inventory account to the recharge operation Ledger 2 account using a cost of goods sold subaccount in the 0991 through 0998 range.

A physical count of the raw materials inventories must be taken each fiscal year end and reconciled to the balance in the inventory account. A representative from the Comptroller's Office should observe the count. The general ledger account control, which records the book value of the inventory at the time of the physical count, should be adjusted to reflect the value of the actual count in the case of discrepancies.

Alternative methods for recording inventory are available. They should be discussed with the Comptroller's Office Manager of Current Unrestricted Funds before implementing.