Know it's valued at lower of cost or selling but not sure where/how value of stock actually appears in company accounts. Got a little book but it don't make much sense to me.
Cheers for any info.
Cheers for any info.
-
bloggoth
If everything isn't black and white, I say, 'Why the hell not?'
John Wayne (My guru, not to be confused with my beloved prophet Jeremy Clarkson) -
Stock........
Usually appears in the balance sheet and as an element of current assets. When acquired the entry is, in simple terms:
Dr Stock
Cr Vendor
When it is used it is:
Dr Expense line in the P&K (often in COGS)
Cr Stock
It is only valued as lower of cost and sale price if revalued for a stock take. Generally most companies operate a moving average cost of stock.
If you want more accounting drivel, PM me -
Stock
Appears as a current asset on the balance sheet, but also as an adjustment in your cost of sales...i.e. dr Stock (balance Sheets), cr Stock (Profit & Loss).Originally posted by xoggoth
It will increase your current assets but also your net profit in the accounts. You also need to include a note in the accounting policies section of your accounts on the company's policy of valueing stock...if you need a standard note send an email.Comment
-
Re: WIP
Not always if you're talking about services rendered over a period of time. In that scenario you could have to account for the expected sales value. Is that the case?Know it's valued at lower of cost or sellingComment
-
Cheers for all the answers.
That's what my book said but I just could not believe it. Seemed wrong that something that had not been sold yet should appear as increased profit in the P&L sheet. But I geuss it must be right.
As for valuation at anything other than cost, that could be difficult. A CD can sell at £30 or £120. Depends on what site licence they go for. Similarly with printed materials, depends if goes to schools or retailers.bloggoth
If everything isn't black and white, I say, 'Why the hell not?'
John Wayne (My guru, not to be confused with my beloved prophet Jeremy Clarkson)Comment
-
in that case..........
You're best bet is to do what the large co's do
Add up the cost price of each similar item of stock.
i.e. all cd's type A cost a total of £100
Then divide by the number of units you have.
So if you have 10 CD's they are £10 each and as you sell them, that what you book them out at.
Called moving average price.Comment
-
Surely you should be selling the license to use the software, not the software itself...Originally posted by xoggoth
Therefore the CDs themselves would have a standard "vannilla" cost...Comment
Comment