Enter opening stock balancesBefore using stock inventory in Accounting you'll need to ensure the value of any stock that you already hold is represented in Accounting. - To make sure stock levels are correct, you need to enter a stock adjustment for the number of items you currently hold for each stock item.
- To make sure your stock value is correct, enter a journal for the total value of all your stock between your stock account and your suspense account:
| Stock (Balance sheet) | Debit |
| | Suspense account (Profit and Loss) |
| Credit |
Ask your accountant for advice on where this value should be moved to at the end of the year. Stock item recordsEach record holds information about your stock item. Access it by selecting an item from your stock list and then selecting Edit to make changes. 
The stock item record fields explained| Category | Used to group similar products together for easier searching and reporting. | | Selling Price | The price used by default on sales invoices.
You can have up to 10 different selling prices. This makes sure that products are sold to customers using the correct price.
You set these up in Products and Services settings. | | Sales Account | The nominal account used to record the sale.
You can set a default for the record but it can be changed per invoice. Setting a default helps to make sure sales are posted to the correct accounts. | | Purchase price | The cost price of the item. This is the price used by default on purchase invoices. | | Purchase Account | The nominal account is used to record the purchase.
We recommend that you use an Asset account from the Balance Sheet. This is so that when you buy the item, it represents an asset to your business. When you sell the item, you need to post a journal to account for the cost and move it to your Profit & Loss. | | Reorder level | This is shown on the Products & Services list and helps you to see when items need to be re-ordered. |
Stock movementsWhen stock items are added to invoices and credit notes, you'll see the stock levels and values update automatically within the stock record. Accounting records stock movements when stock is bought and sold. Each stock movement has a type which records whether stock was added or removed. The stock movement types explained
| Transaction type | Movement type | Details | | Sales invoice | Goods out | The stock level is decreased. This transaction is shown on the stock item’s Activity tab.
Note: You can’t add a stock item to an invoice if you don’t have enough in stock. | | Sales credit note | Negative Goods Out | The stock level is increased as goods have been returned.
This transaction is shown on the stock item’s Activity tab.
Note: If you want to raise a credit for a price change only and not impact stock levels, you should reverse the original invoice in full via a credit note, and then raise a new invoice for the correct price. | | Purchase invoice | Goods In | The stock level is increased, and the last cost price and average cost price on the stock item are updated.
This transaction is shown on the stock item’s Activity tab. | | Purchase Credit Note | Negative Goods In | The stock level is decreased as you have returned the goods to the supplier. The last cost price and average cost are also updated.
This transaction is shown on the stock item’s Activity tab.
Note: If you want to raise a credit for a price change only and not impact stock levels, you should reverse the original invoice in full via a credit note, and then raise a new invoice for the correct price. | | Add stock via an adjustment | Adjustments In | The stock level is increased. The cost price entered on the adjustment is used to work out the value of the stock movement.
This transaction is shown on the stock item’s Activity tab and is not posted to your nominal ledger accounts. | | Remove stock via an adjustment | Adjustments Out | The stock level is decreased. The cost of the adjustment is worked out from the cost price set on the stock record multiplied by the quantity of the adjustment. This transaction is shown on the stock item’s Activity tab and is not posted to your nominal ledger accounts. |
What are stock adjustments?These are where you can manually adjust your stock levels to change the number of items you have in stock. You would generally use this to write off damaged stock, or to adjust quantities after a stock take. This does not update the nominal ledger accounts. When you first start using stock items, you can use adjustments to record the number of items you currently have. Your stock levels are then updated each time you add the item to a sales or purchase invoice. Stock valueAs well as keeping track of the number of items you have in stock, it’s also important to record their value. The value of your stock is usually shown as a business asset on your Balance Sheet. When stock is sold it becomes a cost and should be represented on your Profit and Loss as a cost of sale. This is to make sure your Balance Sheet only reflects the value of Stock you still hold. To record this, we recommend: - The purchase of stock items are recorded against an Asset ledger account. You can set a default nominal ledger account on the stock record to make sure the purchase of items is recorded correctly.
- When stock is sold, you transfer the value of sold stock from the Balance Sheet to the Profit and Loss using a journal. If you’re not sure which nominal ledger accounts you should be using, we recommend you contact your Accountant for advice.
Alternatively, if you want to you can record the purchase of stock to your Profit & Loss. For more information about how to do this, please speak to your accountant or refer to our opening and closing stock guide. [BCB:299:UKI - Personal content block - Dane:ECB]
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