What is Stock in Accounting?

What is Stock in Accounting

What is Stock?

Stock is the value of goods you have on hand ready to sell to your customers.  Not all businesses hold stock, it depends on what they do as a trade.

Example 1:

Sam runs a cosmetics business buying and selling makeup and perfumes.  Sam buys a job lot of perfume to sell to his customers for £1,000.  Therefore the value of Sams stock is £1,000.

Example 2:

Graeme runs a consultancy business selling time by the hour to his customers.  Graeme has no stock as this business does not buy and sell product to their customers.

Value of Stock on Hand

The value of stock is the amount the product cost plus any incidental costs such as shipping.

If in Example 1 above the cost of delivering the job lot of perfume to Sams warehouse cost £100, then the total cost of the stock would be £1,100.