Stock register

Stock register is a record of all goods bought and stored in company's warehouse. Stock register shows which wares are in transit, and shows their value of buying and selling, actualizing the inventory helps company to keep reserves high enough to be aware of surprise of not having goods on stock. Usually there is a set kind how that protocol should look like, and it can be various depending on company.

Format of stock register

As mentioned before, the protocol appearance is depending on type of activity, and can be different for miscellaneous companies. Easiest format of stock register to imagine is for trading company. Cost layering methods used to value goods sold should be mentioned in instruction for stock maintaining, it will be LIFO or FIFO method. It's highly recommended to keep stock register as precise as possible.

Importance of detailed stock register

Highly detailed reports are necessary to achieve following purposes :

• To keep accurate and up-to-date record of assets to share informations with management,
• To enable those assets which are capitalized to be properly accounted for in the company's annual accounts,
• To make management reports possible to prepare,
• To make accountability easier and keep eye on goods quantity,
• For easier planning depending on inventory exchange,
• To ensure quick delivery to contractors,
• To prevent warehouse of emptying.

Accounting

Register of stock is necessary to prepare profit and loss account, for companies trading or producing goods. Cost of goods sold is the cost of the stuff sold to customers, it is concluded on the income statement when the goods are sold, and it is reported by certain document (invoice or receipt).

Retail cost of merchandise includes all costs invested in bringing goods to the inventory making it possible and ready for sale, all additional costs are known as side cost of purchase. Those costs can be shipping cost, preparation of the material (cost of cutting wood), additional fees.

For example, let's pretend that we are selling T-shirts. If we buy single T-shirt for $10 but the cost of shipping is $2, we have to report $12 as cost in inventory account till the moment we find customer who will buy our T-shirt. When it is sold the whole amount of $12 is removed from inventory and is reported as cost of goods sold.

It's simple to calculate profit we got for selling goods, let's adopt that price of one T-shirt is $15, we have to put all values into quick calculations telling us that we just earned $3.

The inventory that has not been used or sold during accounting period (may be month), has to be calculated and moved to next period.

Ending inventory = Beginning inventory (which is ending inventory of previous month) + Goods purchases - cost of goods sold

Examples of Stock register

• A large grocery store may keep a stock register to track their inventory of food and other goods. This register would list each item by name and quantity, along with the cost price and sale price of each item. The register would also track when items were received and sold, as well as any returns or damages.
• A car dealership might also use a stock register to track their inventory of vehicles. This register would list each vehicle by make, model, and year, along with the purchase price and sale price of each vehicle. The register would also track when vehicles were received and sold, as well as any returns or damages.
• A furniture store might also use a stock register to track their inventory of furniture. This register would list each piece of furniture by type and style, along with the purchase price and sale price of each item. The register would also track when furniture was received and sold, as well as any returns or damages.

Advantages of Stock register

A Stock Register is an essential record of all goods bought and stored in a company’s warehouse. It helps the company to better manage their inventory and maintain the necessary reserves to meet customer demands. Here are some of the advantages of maintaining a Stock Register:

• It provides an accurate and up-to-date record of all goods bought and stored in the warehouse. This helps the company to easily track and monitor their stock levels, ensuring that their inventory is always sufficient.
• It helps to identify potential problems or discrepancies in the stock levels and rectify them in a timely manner.
• It helps to ensure that the company has the right amount of goods on hand to meet customer demand.
• It helps to reduce the risk of running out of a product or running low on an item due to an unexpected increase in demand.
• It can help to reduce wastage and ensure that the company is only stocking what they need.
• It helps to provide an audit trail of all goods purchased and stored, which can be used to trace any discrepancies.
• It helps to ensure that the company is following all legal and regulatory requirements related to the storage and handling of goods.

Limitations of Stock register

Stock register can be an important tool for managing the inventory of a company, however there are some limitations to it. These include:

• Unreliable data: Stock register records can be inaccurate or incomplete due to human error, or environmental factors such as temperature, humidity or theft.
• Time-consuming: Maintaining a stock register can be time-consuming and expensive as it requires regular updates and manual entry of data.
• Lack of automation: Many stock registers do not have automated processes, making it difficult to quickly and accurately update the inventory.
• Difficulty tracking multiple warehouses: It can be difficult to keep track of inventory across multiple warehouses.
• Manual processes: Stock register processes are often manual, making it difficult to quickly and accurately update the inventory.
• Difficult to measure performance: It can be difficult to measure performance using a stock register, as it does not provide real-time information.

Other approaches related to Stock register

A stock register is an important document in any business, as it helps to track the goods that are bought and stored in the company's warehouse. It is beneficial to maintain an accurate and up-to-date stock register in order to ensure that the company has enough reserves to meet customer demand. There are several approaches to stock register management that can be used in different business situations:

• First-in, first-out (FIFO): This approach is based on the principle that the goods that arrived first should be sold or used first. This approach is beneficial for tracking goods with a short expiration date or those that are subject to rapid changes in price.
• Last-in, first-out (LIFO): This approach is the opposite of FIFO, and is based on the principle that the goods that arrived last are the first to be sold or used. This is beneficial for businesses that sell goods with a long lifespan, as it allows them to sell the most recently purchased goods first.
• Average cost method: This approach uses the average cost of the goods to calculate the cost of the goods that were sold. This approach is beneficial for businesses that sell goods with a long lifespan, as it ensures that the company can accurately track the cost of the goods that were sold.
• Weighted average cost method: This approach is similar to the average cost method, but also takes into account the number of goods that were purchased. This approach is beneficial for businesses that sell goods with a long lifespan, as it takes into account the amount of goods purchased and helps to accurately track the cost of the goods that were sold.

In summary, there are several approaches to stock register management that can be used to accurately track the goods that are bought and stored in the company's warehouse. Each approach is beneficial for different types of businesses, depending on the type of goods that are sold and the shelf-life of those goods.

Footnotes

Stock register — recommended articles

Inventory value — Inventory record — Closing stock — Bin card — Merchandise inventory — Inventory adjustments — Inventory accounting — Opening stock — Maximum stock level

References

• Example of stock register, (2018). Stock register sample toolsforbusiness.info.
• Glasgow Caledonian University, (2008). Inventory register guide - A Guide for School & Department Managers, Glasgow Caledonian University.
• Mustafa Bakir, (2007) Inventory management and cost accounting systems development, Dokuz eylül university graduate school of natural and applied sciences.

Author: Michał Rogóż