I'm a newbie on here, and have loads of questions! I passed both my IAB Level 1 & 2 with distinction in 2007, but have yet to take the plunge and start up in business, as I have so many nagging 'issues' relating to real-life bookkeeping. It's all very easy when you are given all the figures on a page, with nothing missing!
So, please could anyone shed light on the following gap in my knowledge?
As a bookkeeper working from home on behalf of, say a corner shop, should Closing Stock values only be entered when the client has carried out a stock-take?
Or can you keep stock valuations updated using Purchase and Sales invoices?
To me it seems that the latter could be very difficult, as the purchase/sales invoices may not have detailed quantity information, etc.
If the former is the correct way to go about it, then monthly P & L and Balance sheets would obviously not be 100% accurate if a stock-take was only carried out quarterly. In that case, would you simply add a footnote to the effect of:
'Figures do not take account of any changes in Stock Valuation since last stock-take'?
Thank you for reading, and for any advice you can offer.
Matthew
-- Edited by Minty on Tuesday 9th of March 2010 01:24:19 PM
I see what your saying. The problem is with the stock system of the entity that your looking at in that their method of recording sales and purchases does not accurately record the transactions.
clients however do not go through the trauma of a full stock take lightly so in most cases relying on up to date information from that source is not viable.
I have always found that the delivery note gives the full details of the items delivered and should be your starting point.
You will already know from your studies that you match that to the sales order and invoice. I won't go into the flow of documents as that's just revision stuff.
Anyway, assuming that you are able to build up a clear picture of the goods that the business has received that's half of the battle.
Next step of course is what's happened to those goods and often till rolls are about as much use as a chocolate teapot! In a poorly created system the codes are meaningless to us so how do you relate the sales back to stock?
That's where I find that one needs to talk with the business owner as they seem to think that they can give you a pile of invoices and receipts. You wave a magic wand over it and everything magically falls into place.
It's actually the owner of the business who needs to keep a cash book recording their sales and then we take that, relate it back to the documentation and create a set of books for them.
You may find that giving clients a free copy of VT Cashbook will help them in running their business and help you in that you don't have the nightmare of a couple of plastic bags of unreadable till receipts to try and decode without a key.
Of course, we seldom get clients as soon as they set up a business and if your unlucky enough to get one who turns up with a couple of carrier bags of undecipherable receipts then you need to decide whether to take that client and if you do they need to understand that you will be charging based on time spent and that due to the state of their documentation that will be a lot of time.
They may actually find it cheaper to have the stock take and then you would take the goods that you know that they received, the stock records from the stock take and the total amounts received to give you your starting figures from which hopefully the following year the client would be on top of the business and you would be able to process their books without a stock take.
Fingers crossed I've written what I think that I've written as just been trying to get down what's in my head with a darn house alarm blaring away making it difficult to concentrate on what I'm writing. I'll have another rerad when the alarms stopped and probably rewrite the whole lot!
Hope that there are some pointers in there anyway though.
kind regards,
Shaun.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
I think that there are good reasons to do a physical stock take in most cases but that would depend on the business concerned.
Even if the business has a sophisticated stock control software that links to EPOS so that every sale deducts a stock item, it does not allow for things like damaged stock, obsolete stock or theft of stock. Having worked for some major companies that do use such systems, there was still always the annual pilgrimage to the warehouse, armed with reams and reams of stock printouts, to note any adjustments.
However if a person runs a small shop, notes every item sold and is more aware of any stock issues, then it is more likely that a calculation will give an accurate closing stock values.
At the end of the day, it will be whichever method reflects the true closing stock value, with regard to the effort required to achieve it. As you know, in a retail situation, an accurate closing stock will be needed to work out the cost of sales. It may be, that as the bookkeeper, you may have to advise the owner which is the best method for the individual business.
the understanding sounds good to me... But then again that burglar alarms still going off so I may be going mad.
Hopefully Bill has a clearer state of mind that myself and is able to give a better appraisal.
Right, I'm off the B&Q to buy a ladder and a 12 lb lump hammer!
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Materiality has got to be the key factor? No point in wasting any time and effort going to great lengths to calculate if the stock value does not significantly differ on each stocktake?
When working as an accountant preparing monthly management accounts for banks it was usually sufficient to just put a note to the accounts as you suggested. It was all sorted out when doing the year end accounts.
Materiality has got to be the key factor? No point in wasting any time and effort going to great lengths to calculate if the stock value does not significantly differ on each stocktake?
When working as an accountant preparing monthly management accounts for banks it was usually sufficient to just put a note to the accounts as you suggested. It was all sorted out when doing the year end accounts.
), the client will have some system in place to keep accurate stock records
