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Inventory entry

04 July 2011

suppose an inventory is under valued by20000 in financial year, what entry would i pass in next financial year to rectify the same.Kindly help me with the accounting entry.

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4 Replies

sivaram (Asst Mgr-Taxation) (6918 Points)
Replied 04 July 2011

agree with deepesh

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Deepesh Khatri (CA) (167 Points)
Replied 04 July 2011

In the case, closing stock is undervalued and profit is booked short of actual.

So, on the first day of the next FY, pass the following entry;

Inventory A/c Dr

To P & L A/c

This increases both profit and stock value.

CA ADITYA SHARMA (CA IN PRACTICE ) (16719 Points)
Replied 04 July 2011

Originally posted by : Deepesh
	In the case, closing stock is undervalued and profit is booked short of actual. So, on the first day of the next FY, pass the following entry; Inventory A/c Dr To P & L A/c This increases both profit and stock value.