All the big retailers – and many of the smaller ones – will take part in a stock take. Years and tears ago the stock take took place on a certain day and everyone joined in the count. The results were laboriously collected and then analysed.
It would a dream for every retailer if all the stock could always be sold – but some items will remain obstinately on the shelf. Unsold goods must be taken into account when calculating the gross profit at the end of a financial period.
Every time we go into a large supermarket we see hardworking people counting and analysing stock. Of course the tills will record every transaction and warn when stock levels drop – but canny shop keepers also make their own regular checks.
We could, for example, illustrate the importance of stock with a little eleven plus example.
Mrs.Winterton, who runs a wedding hire business, has a child working towards the eleven plus. She needs to buy some stock for her shop.
July 14th Buys 6 six small chairs for £80.00 each
July 15th She sold two chairs to a customer for £160.00 each.
July 16th Bought two more chairs for £100.00 each.
July 16 Paid £20.00 for flowers.
July 18th Sold three chairs from her original lot for £500.00 the lot.
July 18th Paid delivery charge for £20.00
July 18th Paid chair covers £20.00
The eleven plus question: `What is the value of her stock?’ An eleven plus child can work out the actual arithmetic in this question. But the value of the stock is a bit more confusing.
Any book keeper or accountant would tell you immediately that a debit is made in the Stock Account while a credit is made in the Trading Account.
Eleven plus parents take stock of their child’s progress every day. All week long parents are crediting successes – and debiting failures. All parents can do is hope that they land up in a profitable situation at the end!