07 May 2012
We have accounting of automobiles company and during physical stock verification it is found that there are difference with account in which some amount of stock is negative and some amount of stock excess in account, my query is that i was match the stock in account with physical stock, so how to adjust the stock of short & excess in account.
The prime cause for such difference is improper accounting of stock received and issued by the organisation. You need to first of all check from the records available that opening stock was correctly brought forward to current year or not. Then check the stock of purchases item wise and check stock sold item wise.I m sure that you will surely be able to verify how the differences arising right now are arriving. There is no process by which you will be able to adjust one stock with excess amount with other stock having deficit. This will be against the correct accounting practices.
After doing this excercise if you are still not able to find out the difference then do please let me know. I will try to help you as far as i can..
08 May 2012
Dear expert, It is a right that this issue created by improper accounting of stock but our issue is continue from last thee year though I checked allover excess and deficit stock item entry and there are following query is find out. 1)The item name are less difference in sales against taken in purchase entry. 2)The unit of measure are difference during purchase & sales i.e. 2 barrel purchase taken as 2 ltr. 3)some items not sale but its used in company. 4)some items are not sale but give the customer as a discount or free gift. 5)some purchase item bill is still not receive from vendor. 6)some purchases are taken as a expenses, not taken in stock and during the sale entry, item issued from stock. This type of issue create due to the purchase & sales dept. are different and both have not proper coordination. From the new FY I want to write off above queries and make correct accounting if you suggest me how to solve of stock excess & deficit items as per accounting rules. Also know me if any tax liability create during the solve of difference stock item. Thanks.
Your problem regading stock is very grave due to the fact that such improper practice was continuing since last three years. As far as bills are concerned i would first of all suggest you to get the purchase bills from all the vendors as soon as possible because otherwise you will lose the vat or cst credit and moreover you will have to pay higher income taxes because low purchases will lead to increase of profits on the other hand. So make sure that all purchases are entered into the system and vat or cst liabilities are assured. Thereafter if you have not taken closing stock as on 31st March 2012 on actual basis then finalise a date as soon as possible and take list of actual physical stock with latest rates.Then according to accounting rule of taking closing stock on the basis of cost or market price whichever is less create all stock heads in whichever software you are using and input all the actual physical quantities you have listed out in above excercise. And from here on start proper accounting of stock. If some items have been taken as expense in accounting then try to find out the bills and correct them by taking int actual purchases otherwise you will lose the input credit if any.You will surely have to waste some days in doing the above excercise but i am sure it will be worth wasting a few days than to get involved into a huge problem. Do mail me if you have any furthur queries..
CAclubindia
