Question

Is added to the physical stock to arrive at total closing stock

Answer 1

Answer:

Stock or inventories, however you call it, are physical goods held by the businesses to facilitate future consumption, either through sale or production. If you are into manufacturing or trading, you know how important it is for your business. Even, few service-related businesses like products services deal with inventories.

While the necessity to hold inventories is straightforward, on any given day, you will always have stock which is unsold and lying in your business. This portion of stock is called closing stock.

You can’t just plan not to have a closing stock. As a business, you need to keep sufficient stock to aid in future sale or consumption. This leaves with you a little more stock which is unsold.

Let’s deep dive to understand closing stock with example and how should you calculate closing stock.