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Statement of Profit and Loss

What is the difference between CHANGES IN INVENTORY OF FINISHED GOODS and CHANGES IN INVENTORY OF Stock in trade??? Do we need to separately disclose changes in inventory for each of these??


Kind Dude

Kind Dude

CA Inter

0

17-Feb-21 12:58

31

Answers (6)

Best Answer

Inventory includes stock of raw material, work in progress, finished goods, stock in trade, spares, loose tools etc. (i.e. all the different types of stocks are grouped under one umbrella, namely inventory) Change should be disclosed separately for finished goods, work in progress and stock in trade. Change = difference between opening and closing Change in inventory of finished goods -> for manufacturing company (i.e. number of manufactured products in stock at the beginning and at the end of the year that were/are available for customers to purchase) Similarly for stock in trade and work in progress as wellâ?¦ Change in inventory of stock in trade -> not for manufacturer but for reseller (i.e. who doesnâ??t manufacture himself, buys from someone else and sells the same product again with his profit margin) Change in inventory of work in progress -> for construction contractors (i.e. how far a building has been made and its valuation will be learnt under AS7) Now, which one to disclose and which one to not will depend on the business type/activity/structure of the entity. So, have to see on case by case basis.


Deepak Gupta

Deepak Gupta

CA Inter

760

17-Feb-21 16:25

The difference between the Current Year closing stock and Opening Stock is known as â??Changes In Inventory of Finished Goods, WIP, Stock in Tradeâ?? In case of Purchase in a trading entity it has to disclose "Purchase of stock seperately"


ruchi lahoti

ruchi lahoti

Moderator

17-Feb-21 13:34

Sorry I couldn't understand..... Please explain clearly

I too have the same doubt.


G Aldrin

G Aldrin

CA Inter

10K+

17-Feb-21 13:42