what does stock taking mean in a sole trader business?

Answer 1

Basically writing down what stock you have and usually the value. It is the same for sole traders and big companies

Answer 2

It literally means calculating the value of the unsold stock at a particular date.This is an asset of the business.

It is a necessary part of calculating the cost of sales for most businesses. The trading account calculates the gross profit for a period by deducting the cost of items sold from their selling price. The trouble is, unless you deal with very large items and only sell a few a year, the cost of goods sold is not generally recorded in the books.

So we calculate it from the record of goods bought adjusted for stocks. For example, suppose you set up in business selling the infamous widgets. You buy 100 of these at £2 each. You record a cost price of £200 in your records.

Now you sell some of these and come to the end of your trading period. You count how many are unsold, let us say 40. You know these cost £2 each so their value is £80. So the cost of the ones sold must have been £200 minus £80 = £120.

In the second period you need to take into account the stock at the beginning and add it to the additional items bought. Then the calculation is as above.

Answer 3

You have to account for every item in your business of any value. In reality, it doesn't work like this. Depending on the business, you write down the value of your stock, after each stock take, usually , once every 6 month. You have to remember that this affects your profit and loss account, therefore you have to be careful not to over value or under value your stock.

Answer 4

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Answer 5

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