Archive about 'Stock Write Off and Provision'

Accounting Test Question SWO No. 1 On Stock Loss

Accounting Test Question SWO No 1:

Question A:
Wintner Stores, whose financial year ends on 31 March, took stock on 26 March 2006. The stock on that date was valued at cost $64,670. Wintner added 25% to cost to obtain the selling price in the year ended 31 March 2006
Between 26 March and 31 March 2006, the [...]

Accounting For Stock Loss

Stock Loss is simply the discrepancy/difference between actual physical stock value compared to book value of stock.
Stock loss is normally incurred when stock is lost in a fire or stolen/pilferage.

Accounting Treatment of Stock Loss:

Computation of Stock Loss Figure:

Opening stock                       $X
Add: Purchase                       $X
Goods Available for sale         $X
Less: Cost of sales              ($X)
Closing Stock                       $X
Less:Physical [...]

Accounting Question Test With Answer FS No 1 On Financial Statements

1.The primary purpose of the balance sheet is to
            a.report the financial position of the reporting entity at a particular point in time
            b.measure the net income of a business up to a particular point in time
            c.determine cash flow for the period
            d.report the difference between cash inflows and cash outflows for the period 
2.  [...]

The Difference Between Periodic Inventory System And Perpetual Inventory System

Tabulated below the major differences between Periodic Inventory System and Perpetual Inventory System:
 

Periodic Inventory System

Perpetual Inventory System

Inventory account and cost of goods sold are non-existent until the physical count at the end of the year.

Account and the balance of costs of goods sold and inventory account exist all the time.

Purchases account is used to record [...]

Stock Control System- Re-Order Level System (Part 3)

Let’s look at the first type of Stock control system namely the Re-Order Level System which is also known as the Two-Bin system:

Traits/Characteristic Of This System:

 
·  A pre-determined re-order level is set for each stock item;
 
·      Once the stock falls below the re-order level, a replenishment order is issued and
 
 
·      This is like a two-bin, [...]

Objective Of Stock Control & Types Of Control Systems (Part 2)

This article basically explains the objective of Stock control and the major types of Stock control system.

Objective of Stock Control:

In my article, I have narrated the costs of holding too much stock.

Hence, the overall objective of Stock Control is to maintain stock level so that the total holding costs [...]

Perpetual Inventory System And Types of Physical Stocktaking

PERPETUAL INVENTORY SYSTEM

A method of controlling physical stock level by ensuring the amount of stock level of every item could be accounted at all times. This normally involves detailed recording of all receipts, issues and running balances for each item of stock.
Due to the detailed recording of all in and out, management does not [...]

Effects Of Incorrect Stock Valuation On Profit For The Current And Subsequent Periods (Part 9)

In the earlier article, any overstatement of the closing stock valuation will lead to an overstatement of the gross profit and consequently the net profit for the CURRENT period.
The next thing we need to understand is that the closing stock of one period is the opening stock for the subsequent period. So, what will the [...]

Importance Of Correct Valuation of Stock:Effect On Gross Margin,Net Income & Asset Valuation And Capital (Part 8)

It is important to understand the reason for the need to have correct valuation of stock.
Simply, any incorrect stock valuation will have direct impact on the gross margin of an enterprise leading right down to the bottom-line which is the net income/profit of an enterprise.
As the closing stock is in the current asset of the [...]

Accounting For Stock: Valuation of Stock At The Lower Of Cost & Net Realizable Value ( Part 7)

The usual accounting basis for stock valuation is the LOWER of cost & Net realizable value.
 
What is cost? Cost as mentioned in my other article is the price that the enterprise has paid the suppliers to acquire the goods (historical cost concept)
 
Whilst, Net Realisable Value (NRV) is the total received from sales after deducting all expenditure to [...]