Books of Account and Statements for Opening Stock in Financial Accounting

In Manufacturing and Trading Businesses,purchases/inwards and sales/outwards of Raw Materials and Finished Products/Trading Goods are very common.

In this connection,after purchase and sale of goods,when some goods are unsold as on the last day of an Accounting period, that goods are treated/termed as Closing Stock for the Current Year and Opening Stock for the immediate next Accounting Period/year.

Like that if you want to know the day wise Opening Stock and Closing Stock position,Closing Stock as on a date will be the Opening Stock for the Next day/date.

Related Books of Account/Statements for Opening Stock in a Trading Business.

• Stock Register/Stock Book - Details of Opening Stock 

• Trial Balance - Debit Side

• Trading Account - Debit Side

Meaning of Opening Stock with example.

Opening stocks are the quantity and value of Raw Materials/Finished Products/Trading Goods available on the 1st day of an Accounting Period.

Let's discuss,how we have to maintain the records of Stock and use the recorded data  in different Statements/Accounts of Final Account.

For a better understanding,consider for the stock availability of  two(2) Accounting period/years.

In the Books of M/s.RS Food Products

For the Financial Year 2019-20(Accounting period from date 01/04/2019 to 31/03/2020)

Purchased 500 nos. of Mustard Oil 1ltr packet @ ₹120/- per unit. excluding GST@5%.

Sold 475 nos. of Mustard Oil 1ltr packet @ ₹135/- per unit. excluding GST@5%.

On date 01/04/2019 there are no stocks available.

For the above transactions,Opening Stock Quantity and Value of Mustard Oil 1ltr packet on date 01/04/2019 is nil/zero(0).

Closing Stock of Mustard Oil 1ltr packet as on date 31/03/2020

Quantity = 500 nos. - 475 nos. = 25 nos.

Value = ₹60000 - ₹57000(cost price of goods sold i.e 475 x ₹120/-) = ₹3000(25 nos.@₹120/- per unit)

Closing Stock as on date 31/03/2020 will be the Opening Stock for immediately next Accounting period/year i.e for F.Y - 2020-21.

For the Financial Year 2020-21(Accounting period from date 01/04/2020 to 31/03/2021)

Opening Stocks as on date 01/04/2020 are the Quantity and Value same as

Closing Stock of Mustard Oil 1ltr packet as on date 31/03/2020

i.e Opening Stock as on date 01/04/2020 should be taken

Quantity = 25 nos.(500 nos. - 475 nos.)

Value = ₹3000(25 nos.@₹120/- per unit)

Place of Opening Stock in Trial Balance

Opening Stock amounts are taken in Debit side of Trial Balance.

Given below is a format and procedure,how Opening Stocks are mentioned/shown in a Trial Balance.

Journal Entry for transferring Opening Stock Amount to Trading Account

Place of Opening Stock in Trading Account 

Opening Stock amounts are taken/mentioned at the top of Debit side in a Trading Account.

Given below is a format and procedure,how Opening Stocks are mentioned/shown in a Trading Account.