Year-End Stock

For businesses holding physical products, your Stock (or Inventory) figure is one of the most vital numbers on your Year-End Balance Sheet. Accurate stock values determine your true profit or loss. The goal is to ensure your P&L reflects the cost of items actually sold (Cost of Goods Sold), rather than just everything purchased.

How to Access Stock Features

• For Product Quantities: Navigate to Tools > Products to manage individual item counts and costs.

• For Financial Journals: Go to Accounts > Journals to enter valuation adjustments.

• For Reporting: Go to Reports > Sales Reports > Stock to view quantities on hand and average margins.

1. Setting Your Opening Stock

If this is your first year using SortMyBooks, you must record the value of stock you held at the very beginning of the period.

• Step A: Record the Initial Asset: Create a Journal entry dated the last day of your previous accounting year (e.g., 31/12/2025 if your year starts 01/01/2026).

• Debit: Stock (Current Asset 13000).

• Credit: Opening Balances.

• Step B: Move to P&L: On the first day of your current year, create a second Journal to move that value into your trading costs.

• Debit: Opening Stock (Cost of Sales 58000).

• Credit: Stock (Current Asset 13000).

2. The Physical Stock-Take

A physical count should be performed at the end of your accounting period to determine your final valuation.

• The Valuation: Use the cost price per single item.

• Quantity in Hand: This represents items physically remaining, calculated as: 

Opening Qty - Sales Qty + Purchase Qty.

• Product Settings: You can update individual "Opening Stock" quantities for each product under the Purchase Defaults tab in Tools > Products.

3. Recording Stock Take Values (Journal Entries)

Once your count is complete, you must update the financial ledgers. All stock entries should be made via Journal entries.

For an Increase in Stock Value:

1. Date: Use the last day of the period (e.g., month-end or year-end).

2. Amount: Enter the value of the stock (or the increase since the last count).

3. Debit: Stock (Current Asset 13000).

4. Credit: Closing Stock (Cost of Sales 59000).

For a Decrease in Stock Value:

1. Debit: Closing Stock (Cost of Sales 59000).

2. Credit: Stock (Current Asset 13000).

To check your work, go to Reports > Ledger Reports > Balance Sheet. Your stock value should appear clearly under the Current Assets section.

If you use SMB to track individual stock items, you can get valuable insights from the Stock Report

The Stock Report provides insights to help you make smarter business decisions:

• Average Margin: This reveals your true profitability after covering purchase costs. If this is low, consider negotiating better prices or increasing your sales price.

• COGS (Cost of Goods Sold): Shows the total cost of inventory actually sold. This ensures you are not overpaying tax, as it directly affects net profit.

• Stock Purchase Value: Represents "trapped" cash sitting in your stockroom. If this is too high, you have too much cash tied up in inventory.

Year-End Stock Checklist

Task	Action Required	Checked?
Opening Balance	Recorded on the last day of the previous year.	☐
P&L Transfer	Opening stock moved to Cost of Sales on Day 1 of the current year.	☐
Physical Count	Physical count completed and valued at cost price.	☐
Final Journal	Closing stock journaled to Asset (13000) and Cost of Sales (59000).	☐
Report Review	Checked the Trial Balance to ensure Stock is correctly reflected in Current Assets.	☐