What is Stock in Accounting?

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What is Stock?

Stock is the value of goods you have on hand ready to sell to your customers.  Not all businesses hold stock, it depends on what they do as a trade.

Example 1:

Sam runs a cosmetics business buying and selling makeup and perfumes.  Sam buys a job lot of perfume to sell to his customers for £1,000.  Therefore the value of Sams stock is £1,000.

Example 2:

Graeme runs a consultancy business selling time by the hour to his customers.  Graeme has no stock as this business does not buy and sell product to their customers.

Value of Stock on Hand

The value of stock is the amount the product cost plus any incidental costs such as shipping.

If in Example 1 above the cost of delivering the job lot of perfume to Sams warehouse cost £100, then the total cost of the stock would be £1,100.

Anita is a Chartered Accountant, turned blogger and creator of the ever popular free Go Self Employed Email Mini Course, which has been completed by hundreds of attendees all over the UK. Using her 10 years experience in accounting, tax and operations for Small Businesses, Anita is on a mission to make finance simple for the self employed, so they can stop stressing about tax & finances and focus on building profitable businesses which will give them the lifestyle they dream of.