Before using the stock module, you must consider what method you will use to value your stock, how you want the available quantities to be reported and the method to be used to calculate the profit obtainable from the sale of stock items.

Most of these options are selected in Stock Options.

Listed below are common Stock definitions.

This method works on the assumption that the items that have been in stock the longest will be the first items that are sold.

The system totals the value of inbound transactions in reverse order until the physical quantity is reached.

This is calculated by moving stock in at actual price and out at average price. Please see the example below.

This is calculated as the Physical quantity * Latest Cost Price.

The latest cost price is the cost price currently stored on the stock record or against a sub analysis record. If the option Use Main Cost has been selected on the sub analysis options, then the cost price from the main stock record will always be used.

If Update Stock to Nominal is being used, adjustments made to correct differences between Order value and Invoice value are not taken into account in the Latest valuation.

Calculated as the (Value of Inward Movements / Total Quantity In) * Physical Quantity.

The weighted average value of the stock is calculated each time there is an inward stock movement and is based on all historic inward stock movements.

If Update Stock to Nominal is being used, adjustments made to correct differences between Order value and Invoice value are taken into account in the Weighted Average valuation. The Value of Inward Movement can absorb these adjustments.

As with Weighted, this is calculated as the (Value of Inward Movements / Total Quantity In) * Physical Quantity.

However, this method does not calculate the weighted average value for each movement of stock. Instead, the weighted average value of the stock is calculated on a period basis. This method complies with the ICAEW recommendations for the calculation of the weighted average cost of stock.

When recalculation takes place, the weighted average value at the last point of fixing is used as a the start point and the inward movements of stock since that date are added to this value to calculate a revised weighted average value.

The recalculation is activated from the Weighted Value Recalculation option. It is recommended that recalculation should take place monthly, preferably at a period end, but you should agree the frequency with your auditors.

ICAEW - The Institute of Chartered Accountants in England and Wales.

Important note: The Method of Valuation selected by a company is part of it's internal accounting policy. Any change in accounting policy, such as the Method of Valuation, should be discussed with your auditors prior to making the change. Such a change may have a material effect on the true and fair nature of the accounts; it may materially change the Profit and Loss and Balance Sheet.

Stock quantities can be shown as Physical stock or as Free stock.

This is the actual quantity held in stock

Available stock as defined in Stock Options, either:

In addition to the valuation methods shown above, the cost used in the calculation of profit can be selected from:

The average cost of goods held is recalculated with each movement. Please see the example below.

This is a non calculated value. The cost price from the main stock record or from the sub analysis record will be used to calculate profits. If the option Use Main Cost has been selected on the sub analysis options, then the cost price from the main stock record will always be used.

This is a non calculated value. The standard price from the main stock record or from the sub analysis record will be used to calculate profits. If the option Use Main Cost has been selected on the sub analysis options, then the standard price from the main stock record will always be used.

Calculated as: Total value of stock moved in / Total quantity moved in. This value is recalculated after each inward movement of stock.

The value moved in will automatically include the Landed Cost per unit.

If the stock item is a sub analysis type then the weighted average of the sub analysis will be used.

Landed Costs are the additional costs incurred when purchasing a stock item. These may include such costs as duty, transport, insurance and handling costs. These costs are not included in the cost price, but may be included in the valuation of the stock item for the calculation of profit.

If this method is selected, the profit cost will be calculated by adding the landed cost per unit to the profit cost calculated using the valuation method you have selected.

The oldest stock will always be sold first. The oldest stock is identified by having the earliest movement in date.

The profit cost is calculated as the value of movements in, beginning with the most recent movement and working back, until the physical quantity is reached. This value is divided by the physical quantity.

As with Weighted, this is calculated as the (Total value of stock moved in / Total quantity moved in) but is not calculated for each inward movement of stock. Instead, it is calculated on a period basis and the calculated cost is used for all stock movements until the cost is recalculated.

When recalculation takes place, the weighted average value at the last point of fixing is used as a the start point and the inward movements of stock since that date are added to this value to calculate a revised weighted average value.

This menu, on the Buying Price Table or the Selling Price Table, enables you to select how the Buying or Selling Price line is calculated.

You, or your Supplier may offer a revised price if a particular quantity of the product is sold or purchased. By selecting from this menu you will enable the system to automatically offer a price based on the quantity ordered.

Caution! Not all the options are available for both Buying and Selling prices and the options for Price Line 1 are also limited.

The Average Cost of goods held is recalculated with each movement. Any subsequent issue is then made at that price, until a further receipt of goods causes a recalculation of the average cost.

This example shows a stock value of £296 at the 31st December: