increase in stock

This query is : Resolved

Prabhu Kumar.C.C (Querist)
Follow

22 November 2007 Hi all,

I want to know whether if there is increase in Finished stock, will there be increase in raw material consumption or the other way. Please help me in this matter in detail.

Late CA Sampat Jain

Late CA Sampat Jain (Expert)
Follow

22 November 2007 consumption of raw material = opening stock of rawmaterial + purchase during the year - closing stock

Increase in stock of raw material as per Balance Sheet(year end) = closing stock - opening stock ( where closing is greater than opening)

Other things remaining constant( i.e opening and purchase ) if closing stock increses .........it means lower consumption and not increase in consumption