Closing Stock Values in TallyPrime: 3 Easy Steps + Example

Closing stock refers to the value (cost) of the inventory you have remaining at the end of a specific accounting period, like a financial year.

It becomes the opening stock for the subsequent period.

Here’s a detailed explanation of closing stock values in TallyPrime, including calculations and examples:

1. Calculating Closing Stock:

TallyPrime typically calculates closing stock automatically based on the following formula:

  • Closing Stock = Opening Stock + Purchases – Sales

2. Understanding the Formula:

1. Opening Stock:

The value of your inventory at the beginning of the accounting period (carried forward from the previous period’s closing stock).

2. Purchases:

The total cost of all goods purchased during the period.

3. Sales:

The total revenue generated from selling inventory items during the period (excluding any cost of goods sold).

3. Example: Calculating Closing Stock

Let’s consider a scenario:

  • Opening Stock (April 1, 2024): Rs. 100,000
  • Total Purchases throughout the year: Rs. 500,000
  • Total Sales throughout the year: Rs. 650,000

1. Calculation:

  • Closing Stock = 100,000 + 500,000 – 650,000
  • Closing Stock = Rs. 50,000

2. Verifying Closing Stock:

TallyPrime automatically calculates the closing stock based on your transactions.

However, you can verify this value using the Stock Summary report:

  • Navigate to Gateway (Alt+F12) -> Reports -> Inventory Reports -> Stock Summary.
  • Select the appropriate date range (e.g., the entire financial year) to view the closing stock value on the report.

4. Additional Considerations:

  • While TallyPrime automates the calculation, it’s crucial to periodically reconcile your physical stock count with the system’s closing stock value to identify any discrepancies.
  • Discrepancies might arise due to shrinkage, damage, or errors in recording transactions. Addressing these discrepancies ensures accurate closing stock figures.

5. Benefits of Accurate Closing Stock in TallyPrime:

  • Precise Financial Statements: Accurate closing stock figures contribute to reliable financial statements like the Balance Sheet, reflecting the true value of your remaining inventory.
  • Improved Inventory Management: Knowing your closing stock helps you plan your future purchases effectively, avoiding overstocking or understocking situations.
  • Cost of Goods Sold (COGS) Calculation: Closing stock plays a vital role in calculating COGS, which reflects the cost of inventory sold during the period.

6. TallyPrime Features for Closing Stock:

TallyPrime offers features like:

1. Inventory Adjustments:

Allows manual adjustments to your stock levels if needed, potentially affecting the closing stock value.

2. Inventory Valuation Methods:

Provides options like FIFO (First-In-First-Out) or Average costing to determine the cost of goods sold and closing stock based on your preference.

Remember, accurate closing stock is essential for maintaining a clear picture of your inventory health, ensuring financial statement accuracy, and optimizing your inventory management strategies.

Comments

2 responses to “Closing Stock Values in TallyPrime: 3 Easy Steps + Example”

  1. Shaik Abdul Rafee Avatar
    Shaik Abdul Rafee

    Respected Sir,
    I am Rafee from Andhra Pradesh. I gat a problem while calculation closing stock like this.
    Open balance of mouse
    100 units @ Rs 150 amount Rs 15000
    Sales:
    50 units @Rs. 300/- amount Rs 15000
    Closing stock shows
    50 units Rs. 15000/-
    I under stand that closing stock was calucated @ Rs. 300/- per unit instead of Rs. 150/-. It was happen for this item only remaining all items are valued as their opening unit price. I am requesting you how it may corrected and why it was happend.
    Thanking you Sir

    1. Follow these steps:

      Alter the Stock Item

      Gateway of Tally → Alter → Stock Item (select Mouse).

      Go to the section Stock Valuation.

      Check Method of Valuation.

      If it says “Selling Price” or “Last Sale Price”, that’s the reason.

      Change Valuation Method

      Set it to:

      FIFO (First In First Out) – If you want stock to be valued at the oldest purchase rate.

      Average Cost – If you want stock to be valued at average purchase rate.

      Cost (Default) – To always consider purchase rate.

      (In your case, set FIFO or Cost → it will value closing stock @ ₹150).

      Recompute Stock

      After changing, go to Gateway of Tally → Reports → Stock Summary.

      Press Ctrl + A to accept and refresh.

      Your closing stock should now show 50 units @ ₹150 = ₹7,500.

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