subject: Accounting & Bookkeeping Routines - The Stock Take [print this page] It is fundamentally the process of counting, weighing or measuring all of the stock held by a business at a point in time. The procedure is most commonly carried out at the end of a business' financial accounting year end. However, a stock take can be undertaken quarterly, monthly or even weekly as part of the management accounting process. The opening and closing stock figures feature in the profit and loss account when calculating the gross profit for a trading period. In addition, the closing stock figure is included in the balance sheet under current assets. Therefore, any stock and the value associated with it will have an effect on the financial performance and financial standing of a business.
There are many benefitsto carrying out a thorough stock take, firstly, it can help to verify the accuracy of the general stock recording system maintained by a business. Indeed, any weaknesses relating to the custody and control of stock can be identified and addressed by the owners or managers the business. Carrying out a stock take can also highlight any discrepancies that have resulted due to theft or fraud. If theft or fraud is left undetected it can seriously damage the trading activities and profit of a business.
A stock take can help provide us with information about the stock movements during the year and the stock on hand at the end of an accounting period. This information is essential as it can help a business to deal with slow moving items. Some items of stock may be identified as obsolete or damaged and thus may need to be written-off against the profits in the profit and loss account. Carrying out a stock take can also help to ensure that any movements in terms of sales and purchases during a period have been accounted for correctly.
Accounting & Bookkeeping Routines - The Stock Take
