Assess regular scheme registered in gst act.trading a Edible oils sales. stock value detailes mentioned below as on dt. 31.03.2020.
1. stock value as per accounting ledger books.Rs.10,00,000/-(10 lacs)
2.assess verifying physically counting stock value Rs.12,00,000/-.
Assess How to adjustment of difference stock value Rs.2,00,000/-.
First of all, organisation should find out the reason for such difference, which may is improper accounting of stock received and issued by the organisation.
Before matching value of stock, you need to match no. of stock items in accounting ledger books and physical available quantity. :-
- If no. of items are matched then the difference is due to inventory valuation method, please refer IAS-2- Inventories and adopt uniform method of inventory valuation.
- If no. of items are mismatched. 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….when error is found pass necessary rectification entry.
If your inventory is not maintained in pieces/ packets and it is maintained in open qty and this difference in accounting ledger stock and physical stock is due to normal loss and difference could not be traced through accounting ledgers error. then we have to take inventory as physical verified and difference is adjusted as follows:-
- Normal loss means that loss which is inherent in the processing operations. It can be expected or anticipated in advance i.e. at the time of estimation.The cost of normal loss is considered as part of the cost of production in which it occurs. If normal loss units have any realisable scrap value, the process account is f credited by that amount. If there is no abnormal gain, then there is no necessity to maintain a separate account for normal loss.
- Abnormal loss means that loss which is caused by unexpected or abnormal conditions such as accident, machine breakdown, substandard material etc. From accounting point of view we can say that abnormal loss is that loss which occurred over and above normal loss. These losses are segregated from process costs and investigated to prevent their occurrence in future. Process account is to be credited by abnormal loss account with cost of material, labour and overhead equivalent to good units and the loss due to abnormal is transferred to Costing Profit and Loss Account.
- If the actual loss of a Process is less than that of expected loss then the difference between the two will be treated as abnormal gain. In another way we can define it as the difference between actual production and expected production.
- The value of abnormal gain is transferred to the debit side of the relevant process and ultimately closed by crediting it to the Costing Profit and Loss Account.