An annual inventory is an accounting procedure whereby a business reviews the value of its assets and liabilities at the end of its fiscal year. This process helps ensure that the company's financial records are accurate and up-to-date. In addition, the results of the annual inventory can be used to inform critical financial decisions, such as whether or not to secure a loan or sign a new lease. Typically, an annual inventory will involve physically counting the company's assets (e.g., cash, equipment, property) and liabilities (e.g., accounts payable, loans). The totals from this count will be compared to the values listed in the accounting records. If there are any discrepancies, they will need to be addressed.