Stock Adjustment
Also called: Inventory Write-down, Stock Difference
Gains or losses when the physical count differs from the books, or when stock is revalued, on the Profit and Loss statement.
In detail
Stock Adjustment is where differences between the stock on the books and the stock actually in the warehouse land. A Stock Reconciliation after a physical count, a Material Receipt entry for goods found, a Material Issue for samples or damaged items, and any change to an item's valuation rate all post here against Stock In Hand. A shortage debits it, a cost; a surplus credits it. The ledger therefore tells the owner how much is being lost to theft, breakage and poor counting, and auditors read it closely. It should never hide an unknown difference; the count sheet and the reason should be attached. Opening stock when starting BRAccount goes against Temporary Opening, not here.
Formula
Stock Adjustment for the period = Sum of (Book quantity - Counted quantity) x Valuation rate, plus valuation rate changes
Accounting entry
| Account | Debit | Credit |
|---|---|---|
| Stock Adjustment | Rs 8,000 | |
| Stock In Hand | Rs 8,000 |
How to record it in BRAccount
- 01Count the warehouse and note each item's actual quantity.
- 02Go to Stock > Stock Reconciliation > New, pick the warehouse and date, and enter the counted quantities.
- 03Set Difference Account to Stock Adjustment and attach the count sheet.
- 04Submit. The entry below posts for the shortfall and the stock ledger now matches the shelf.
- 05For damaged goods, use Stock > Stock Entry > Material Issue with the same difference account.
- 06Review the ledger monthly on Financial Reports > General Ledger to track losses.
When to use it
Posted automatically by Stock Reconciliation and by Material Issue Stock Entries. Count stock at Ashadh end and reconcile.
Example from the demo books
Dr Stock Adjustment Rs 8,000, Cr Stock In Hand Rs 8,000 for six sleeping bags missing at the Ashadh end count.