Stock systems GRADE 11 STOCK SYSTEMS Inventory Systems

Stock systems GRADE 11

STOCK SYSTEMS Inventory Systems: From grade 8 till this far, we followed the perpetual inventory system. This system means that the business keeps a continuous record of the movement of stock into and out of the business. This movement is an electronically maintained process, whereby the business must continuously update its inward movement of stock by debiting the trading stock account. The outward moving of stock is updated by the following entry: Debit, Cost of sales and Credit, Trading Stock.

STOCK SYSTEMS The cost of sales entries only accounts for the merchandise that has been sold and processed through the computerized cash registers of the business. The balance in the trading stock account shows the value of stock on hand. The periodic inventory system is only possible if the business is using an inventory computer programmed technology. The trading stock account can be drawn up to show the movement of stock, eventually indicating the value of the stock on hand.

The differences between the Perpetual and Periodic Inventory Systems. Perpetual Periodic Cost of sales is determined at the point of Cost of sales can only be calculated at sale. the end of year. When merchandise is sold, the cost of sales cannot be determined. Keeps continual track of Stock on hand through the trading stock account. Stock on hand can only be determined through a physical stock take process.

Periodic System: Advantages Disadvantages A cheaper system to maintain Theft of trading stock may not be detected due to minimum control of stock. Suitable system for a Trading stock on hand can only business selling a variety of be determined through a items where it is difficult to physical count. determine the cost price of items sold.

EXAMPLE: Perpetaul inventory system Grade 11: You know this account: General Ledger of Zachele Traders Balance sheet section Tradingstock 2013 June 2013 70 000 June 1 Balane a/b 30 Bank CRJ 210 000 CJ 125 00 Creditors contrl 30 Cost of sales CRJ 180 000 Cost of sales DJ 80 000 Creditor control CAJ 7 000 Balance c/d 138 000 405 000 2013 July 1 Balance b/d 138 000 Remember tis is the perpetual system. Use the same information to draw up the periocic inventory system. . 405 000

PERIODIC INVENTORY SYSTEM Opening stock Plus: Purchases (210 000 + 125 000 – 7 000) 70 000 328 000 398 000 Closing stock Cost of sales (138 000) 260 000

Required to the activities: 1. Activities are provided. 2. Complete the activities 3. Compare your answers with the memorandum. 4. Do the class test. 5. Good luck with the topic. .