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 thatRead more
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
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 thatRead more
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.
Formula
There are 3 main formulas used for Opening Stock’s calculation. They are-
Opening Stock = Raw Material Cost + Work in Progress + Finished Goods Cost
Opening Stock = Sales – Gross Profit – Cost of Goods Sold + Closing Stock
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-
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.
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