12 Replies
CA RICHA BADALIA
(CA,CS)
(1682 Points)
Replied 18 September 2011
I dont think it is possible.closing stock can be zero but it cant be negative
Prakash
(Chartered Accountant)
(560 Points)
Replied 18 September 2011
They might have not recorded all stock transfers properly
Check the accounting done
Prakash
(Chartered Accountant)
(560 Points)
Replied 18 September 2011
Have a glance over Incoming Stock in particular
Check whether they recorded everything
Anindya Choudhury
(Articled Assistant)
(67 Points)
Replied 18 September 2011
At first I must say that its not possible as per my knowledge. But, if it is so then there must have many duplicate worng entries in for sales. check the sales ledger throughly.. that must be the only reason.
* Krishna *
(CA Student)
(6149 Points)
Replied 18 September 2011
@ Bimal
One such instance of having negative closing stock balance in my view is below:
A business may be having a stock that has become obsolete due to some reasons and to dispose off the same, it may cost more than its net realisable value, or, there may be a possibility that if the stock becomes damaged due to fire, flood or other calamity, resulting that such stock needs to be disposed off, but its damaged condition means that the necesaary disposal costs exceeds its proceeds, if any. Let others comment.
Victor
(CA IPCC/CWA INTER/CS EXECUTIVE/MBA(Finance))
(339 Points)
Replied 18 September 2011
It is possible in one case....
Akansha
(student)
(92 Points)
Replied 19 September 2011
@ BIMAL
CLOSING STOCK CAN NEVER BE AT A NEGATIV VALUE AS FAR AS MY KNOWLEDGE IS CONCERND........
Akansha
(student)
(92 Points)
Replied 19 September 2011
@ KRISHNA
THE OBSOLETE STOCK THNG WCH U WROTE , I THINK SO IS MAYB NT CRRCT.BCOS D RULE IS 2 SHOW C.STOCK @ COST OR NET REALISABL VALUE WCHEVER IS LOWER. SO EVN IF DISPOSAL COSTS XCEED ,RESULTIN IN A NEGATIV NRV,D STOCK CN ALWAYS B SHOWN AT COST.....DATS MY OPINION,LETS C WT ODRS HAV 2 SAY........ :)
CA Devender Chauhan
(Group Financial Accountant)
(1526 Points)
Replied 19 September 2011
Generally we can speak that stock value can never be negative.
But sometimes this situation occurs in some small organisations.
The same thing was happened with me. Actually the account personnel enter the stock in the books on receipt of bill from the vendor whereas it is consumed by the production dept. on receipt of goods from the vendor. There was a time gap between receipt of goods and bill.
But i don't think that this practice is good. So it may be the case with your organisation also.
Ateeq
(CA - Final)
(218 Points)
Replied 19 September 2011
Dear Bimal,
The one possible case might be is inward of stock might have not been recorded properly, But the stock issues are consistent. Say
Opening Stock 50.
Stock Inward 100
Total Stock 150.
Stock Issued (125)
Closing Stock 25
In the above illustration if Inward has by mistaked not accounted in the books than the closing stock will be: -
Opening Stock - Stock Issued i.e.,
50 - 125 = -75.
And other than above illustration even I don't believe of that stock will be in negative.
All the Comments on the above are heartly welcomed.
mayank
(article)
(103 Points)
Replied 19 September 2011
Check in the Software if the entry of Opening Stock have been posted or not
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