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Why we create stock reserve?

Himanshu Arora (Articleship) (292 Points)

12 September 2012

Hello Friends,

can anyone tell me why we create stock reserve??

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24 Replies

CA Dhiraj Ramchandani (CA, M. com) (10823 Points)
Replied 12 September 2012

What?

Bhai, i dont want to make fun of you, but you are a COMMERCE STUDENT.., and still asking such Q?

Nyws, hope you will get all the relevent answers from others.. tk care and give proper attention to your studies..

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CA Manish (Job) (5264 Points)
Replied 12 September 2012

To eliminate the profit earned by the two divisions or units of the same company while transacting between themselves.

2 Like

Bhaskar Unnikrishnan CPA CMA (Accounts / Administration) (414 Points)
Replied 12 September 2012

Many a times, it so happens that a manufacturer, consignor or a head office does not directly engage in selling its products. It instead sends or consigns the goods to a profit centre--a dedicated centre for selling its products. The profit centre in case of a consignor is a consignee and in the case of a head office, its branch or retail outlet. Now when the principal sends the goods to the profit centre, it issues/transfers the goods at a price which is higher than the cost of production of those goods. This price is generally called Invoice Price (I.P.) and this is the value at which the branch/consignor records the receipt of the same. When the branch sells these goods it sells at a price greater than the I.P. thus earning a profit which has two components-- 1.The mark up on the cost of production (i.e., the difference between the I.P. and the cost of production), and 2.The profit made by the branch/consignee (i.e., the difference between seeling price of the branch and I.P.) At the end of the accounting period, any stock is lying unsold with the branch/consignee is having the value of I.P. (at which the head office/consignor had issued the goods). But as per AS-2, inventory can only be valued at cost or NRV, whichever is lower. The excess mark-up on the value of the goods needs to be removed as that is unrealised profit. This unrealised profit is given a name in accountancy - STOCK RESERVE

6 Like

Aarush (Delhi) (1566 Points)
Replied 12 September 2012

Dhiraj ji,

What happended if a commerce student/s don't know any concept of accounts and want to learn.

I think its not about that any person is know or not.. its all about dedication of learing.

would request to please don't demotivate to any one.

9 Like

Bhaskar Unnikrishnan CPA CMA (Accounts / Administration) (414 Points)
Replied 12 September 2012

Agree Gaurav. Just as Steve Jobs Said "Live like an idiot and learn from every where". I can find that even experts are unable to answer some queries in this blog. That doesn't means they are not experts in their field, but lack of insight to the particular subject. I encourage all to ask whetever questions in their mind, even if you feel it as stupid one... Happy learning...

3 Like

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Keshav (chartered accountant) (286 Points)
Replied 12 September 2012

Agree wid Gaurav.....dhiraj bhai don't make fun of others ....ok.hav a gud day.....if u can't answer a query ,u hav no rite to say any1 nonsense.....respect others ...Wat if sum1 says u same thing ,if u ask a question to ny1.

3 Like

Himanshu Arora (Articleship) (292 Points)
Replied 13 September 2012

Thanks for your great and brillaint answers.Its really help me to understand stock reserve better...

I dont want to say anything to Mr.Dhiraj,as you have already said many about their reply.One thing i want to say there were lots of members at CCI who havw query like i asked.I got an PM from someone which contains

"Thanks for asking query it also help me in studies, i want to ask but Sochta hu Log kya Kahege"

Why is CCI created to help students or to play with emotions...

I am really thankful to all of you tocreply on my post..

1 Like

Himanshu Arora (Articleship) (292 Points)
Replied 13 September 2012

thanks

CA Dhiraj Ramchandani (CA, M. com) (10823 Points)
Replied 13 September 2012

Himanshu, i never made fun of you or sort of doubted your intelligence, smartness, bla bla bla..

But trust me, these are the basic concepts/theories/topics.., you need to understand them yourself, either google them or get them from market..

I am telling this from experience, you are a student, so getting answers from people for such basic Qs too.. Bhai, ek baar CA ban gaya na aur job mil gayi, toh koi doubt solve karna toh door, teri sunega bhi nahi.. Its corporate culture.. There, you need to sort out everything on your own, within stipulated time...

CA Ayush Agarwal (Kolkata-Pune-Mumbai) (27186 Points)
Replied 13 September 2012

Originally posted by : CA Dhiraj Ramchandani
	Himanshu, i never made fun of you or sort of doubted your intelligence, smartness, bla bla bla.. But trust me, these are the basic concepts/theories/topics.., you need to understand them yourself, either google them or get them from market.. I am telling this from experience, you are a student, so getting answers from people for such basic Qs too.. Bhai, ek baar CA ban gaya na aur job mil gayi, toh koi doubt solve karna toh door, teri sunega bhi nahi.. Its corporate culture.. There, you need to sort out everything on your own, within stipulated time...

Mr. Dhiraj, You are Saying That I Dont Want to Make Fun of You, But You Did.

Thats Wrong.

He is Student, Not CA Like You, That He Should Feel Shy While Asking Any Such Basic Question.

1 Like

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Himanshu Arora (Articleship) (292 Points)
Replied 13 September 2012

Originally posted by : CA Dhiraj Ramchandani
	Himanshu, i never made fun of you or sort of doubted your intelligence, smartness, bla bla bla.. But trust me, these are the basic concepts/theories/topics.., you need to understand them yourself, either google them or get them from market.. I am telling this from experience, you are a student, so getting answers from people for such basic Qs too.. Bhai, ek baar CA ban gaya na aur job mil gayi, toh koi doubt solve karna toh door, teri sunega bhi nahi.. Its corporate culture.. There, you need to sort out everything on your own, within stipulated time...

Hello Mr Dhiraj,

I have some basic query which i tried to asked here "Iska Ye Matlab to Nhi hai Ki mUjhe Kuch Bhi ata hai".JO chapter Mera Weak use maine ache se karne ke liye to query poch lee..Main mug up bhi ker sakta tha concept ko...

And CCI is a place where your query solved with good example and on Google you will find only those things which are in trend and also which gave money to the site owner.

Can you tell me what is wrong if i aksed such query...BHai Maine koi GUNNA to nhi kiya ye query poch ke"

1 Like

Chirag Kalra (CA Final) (42 Points)
Replied 13 September 2012

Mr. Dhiraj ji,

While interpreting your words "hope you will get all the relevent answers from others" states even you are not aware of the answer of this question because if you knows the answer you must have posted it instead of writing your crappy creativity (Google it or market it etc.)-Ab ni pata to ni pata jaan le le kya bache ki........

And coming on to the corporate culture it depends on the person to person & orgainsation to orgainisation since where I am working everyone is very cooperative.

--->>>Naukri badal le mamuu varna tum b un k jaise ban jayoge................aadhe to ban gye ho tbi to answer ni btaya or faltu gyan likhne me time waste kr diya........

hope you will get all the relevent answers from others

Read more at: /forum/details.asp?mod_id=219985&offset=1#.UFF5Rq55ohA

hope you will get all the relevent answers from others

Read more at: /forum/details.asp?mod_id=219985&offset=1#.UFF5

hope you will get all the relevent answers from others

Read more at: /forum/details.asp?mod_id=219985&offset=1#.UFF5Rq55ohA

4 Like

CA Ayush Agarwal (Kolkata-Pune-Mumbai) (27186 Points)
Replied 13 September 2012

Originally posted by : Chirag Kalra
	Mr. Dhiraj ji, While interpreting your words "hope you will get all the relevent answers from others" states even you are not aware of the answer of this question because if you knows the answer you must have posted it instead of writing your crappy creativity (Google it or market it etc.)-Ab ni pata to ni pata jaan le le kya bache ki........ And coming on to the corporate culture it depends on the person to person & orgainsation to orgainisation since where I am working everyone is very cooperative. --->>>Naukri badal le mamuu varna tum b un k jaise ban jayoge................aadhe to ban gye ho tbi to answer ni btaya or faltu gyan likhne me time waste kr diya........ Read more at: /forum/details.asp?mod_id=219985&offset=1#.UFF5Rq55ohA hope you will get all the relevent answers from others Read more at: /forum/details.asp?mod_id=219985&offset=1#.UFF5Rq55ohA hope you will get all the relevent answers from others Read more at: /forum/details.asp?mod_id=219985&offset=1#.UFF5 hope you will get all the relevent answers from others Read more at: /forum/details.asp?mod_id=219985&offset=1#.UFF5Rq55ohA

Super Bol.....Great........

2 Like

Himanshu Arora (Articleship) (292 Points)
Replied 13 September 2012

Originally posted by : CA AYUSH AGRAWAL
	Originally posted by : CA Dhiraj Ramchandani Himanshu, i never made fun of you or sort of doubted your intelligence, smartness, bla bla bla.. But trust me, these are the basic concepts/theories/topics.., you need to understand them yourself, either google them or get them from market.. I am telling this from experience, you are a student, so getting answers from people for such basic Qs too.. Bhai, ek baar CA ban gaya na aur job mil gayi, toh koi doubt solve karna toh door, teri sunega bhi nahi.. Its corporate culture.. There, you need to sort out everything on your own, within stipulated time... Mr. Dhiraj, You are Saying That I Dont Want to Make Fun of You, But You Did. Thats Wrong. He is Student, Not CA Like You, That He Should Feel Shy While Asking Any Such Basic Question.

Mr Ayush,you are right at CCI lots of students dont ask such query beacuse of "Log Kya Kahege" and even some of my friends on CCI do not ask such query due to above reason.