What is Opening and Closing Stock?

Transcript

What is Stock/Inventory Example 1 Suppose a TV Shop Purchase 5 TV @ 20000 each = 100000 on 3rd March It sells 3 TV @ 30000 each = 90000 on 20th March What is profit and Value of Stock Answer: Profit = Sales - Purchase Wrong Method 90000 - 100000 Profit = Sale - Purchase + Value of Stock 90000 - 100000 + 40000 30000 2 TV remains unsold is the Stock Quantity Not Sold 2 (5-3) Price per Quantity 20000 (Cost Price) Value of stock 40000 (Cost Price *Qty) (Note:- Stock is normally valued at Cost Price) Stock means Inventory of Goods which are available for sale to customers It refers to that goods which we have Purchased and not yet sold What is Opening and Closing Stock? Stock/Inventory Opening Stock Closing Stock Stock-in-hand in Stock-in-hand at end the beginningof the of the accounting accounting period Period. Example 1 What is Value of Closing Stock & Opening stock? Answer: Closing Stock Value as on 31st March 40000 Opening Stock value as on 1st April 40000 Example 2 Goods Purchased 10 Kg @ 100=1000 In Feb Goods Sold 7 Kg @ 150=1050 In Feb Good Sold 2 Kg @ 150=300 in March What is Opening and Closing Stock of Feb and March? Feb March Opening Stock 0 3Kg*100 Closing Stock 3Kg*100 1Kg*100 What is Profit? Example 2 Profit (In Feb) = Sales - Purchase + (Closing Stock-opening Stock) (1050 - 1000) + (300 - 0) 350 Profit (In March) = 300 - 0 + (100 - 300) 100 What is Stock in case of Different Types of Businesss? Shopkeeper Manufacture Service Provider Buys & Buys Raw material Doesn’t Sells & Manufacture It Deal Finished & then Sell with Product Finished Product Goods It has stock It has stock No Stock of Finished of Raw Material, Product Work in Progress, Finished Product Example Example Example Mobile Shop Cloth Factory Repair Shop Different Type of stock (in Case of Manufacturing Concern) Example 3 Suppose a Cloth factory 1000 Kg cotton purchased Out of this, 800 kg entered into prodution It will be used to make 80 Shirts 70 shirts actually produced Remaining in Production Stock of raw material = 200 Kg of cotton Finished Goods = 70 Shirts Work In Process = 10 Shirts are in process of Manufacturing Stock of Work in Finished Raw material Progress(WIP) Goods Raw material Stock that Processed used for is in the Goods Manufacturing process of Manufactured of goods being For the lying unused finished. purpose of sale Valued at cost Valued at an Valued at cost or aggregate of or Net realisable cost of raw Net realisable value(NRV) Material, value (NRV) (Market value) labour other (Market value) whichever production cost whichever is lower (Fuel, Power) is lower