Understanding Stock Effect

A] Opening Stock

Generally, in any accounting software, entry of opening stock is created in Items - master list.

Opening Stock (in Amount) :

It is calculated as (Op. Stock [qty] X Purchase Rate of that Stock).

B] Regular Entries

In "Purchase Entry" - the stock [qty] increases.

In "Purchases Return" (Debit Note) - the stock [qty] reduces.

In "Sales Entry" - the stock [qty] get reduces.

In "Sales Return" (Credit Note) - the stock [qty] increases.

C] Closing Stock

Closing Stock = (Opening Stk.)+ (Purchase) - (Sales)

It is the stock found at the end of the financial year (31st March).

Closing Stock (in Amount)

It is calculated as (Cl. Stock [qty] X Purchase Rate of that Stock).