AadilCurious In: 1. Financial Accounting > Accounting Terms & Basics What is the meaning of opening stock? What is the meaning of opening stock? Share Facebook You must login to add an answer. Username or email* Password* Captcha* Remember Me! Forgot Password? Need An Account, Sign Up Here 1 Answer Voted Recent GautamSaxena Curious . 2022-07-13T22:12:44+00:00Added an answer on July 13, 2022 at 10:12 pm This answer was edited. Meaning of Opening Stock Opening stock is the inventory or stock of goods that are available at the beginning of the new accounting year carried down from the previous year’s closing stock which is recorded in the books of accounts. In simple words, Opening stock is the goods/quantity/products that are held by a business at the beginning of a new accounting period and it is the closing stock of the preceding year carried down. Similarly, the closing stock is the number of unsold goods that remain with the business at the end of an accounting year and is further carried down to the next year as Opening Stock. Formula There are 3 main formulas used for Opening Stock’s calculation. They are- For manufacturing companies Opening Stock = Raw Material Cost + Work in Progress + Finished Goods Cost When only Sales, GP, COGS, and Closing Stock are given Opening Stock = Sales – Gross Profit – Cost of Goods Sold + Closing Stock You can use this one when only limited information is provided Opening Stock = COGS + Closing Inventory – Purchases Types of Opening Stock There are three types of Opening Stock or we may also say that Opening Stock consists of these 3 elements. They are- Raw Materials- These are the unprocessed goods held by a business that is yet to be converted into finished goods. Work in Progress- These include the goods that are in process but not converted into finished goods. Finished Goods- These are the goods/products that have completed the manufacturing process but have not yet been sold. Opening Stock in Final Accounts Opening stock is a part of the Trading Account while preparing the Final Accounts. And this is how it is posted in the Trading A/c. Trading A/c (for the year ending…) Example of Opening Stock Example IKEA, the biggest Furniture manufacturer collected this data on April 1, 2021, Timber – $300,000 Wood – $30,000 Nails – $15,000 Pre-cut Wood – $120,000 Assembled Furniture – $400,000 Now, adding them (as said earlier, Opening stock is a combination of these three.) Opening Stock (Raw Material + Work in Progress + Finished Goods) = $865,000 Therefore, that’s how one can calculate Opening Stock. 0 Share Share Share on Facebook Share on Twitter Share on LinkedIn Share on WhatsApp Related Questions What are some examples of deferred revenue expenses? Are brands intangible assets? What comes in debit side of Realisation account? What is recorded in the Realisation account? What is not included in Realisation account? What is recorded on the credit side of a Realisation account? Can accounts payable have a debit balance?