Cost of sales

Focus recommends posting stock valuation between the Cost of Sales and the balance sheet based on the formula:
Cost of sales = Opening Stock + Purchases – Closing Stock

Stock accounts

To process the stock valuation, Focus requires that you operate three types of stock accounts.

1. Stock (Balance Sheet item): this is generally a debit balance and is reported on the balance sheet. At the beginning of the financial period, this value is transferred to the debit of the Opening Stock account. At the end of the financial period, this value is transferred from the credit of the Closing Stock account.
2. Opening stock (PL – Cost of Sales item): this is generally a debit balance and is reported on the Profit & Loss Statement. It holds the value of stock at the beginning of the financial period

• Closing stock (PL – Cost of Sales item): this is generally a credit balance and is reported on the Profit & Loss Statement. It holds the value of stock at the close of the financial period

To post the stock valuation figures

1. post opening stock at the beginning of the year
2. post closing stock valuation at the end of period 1
3. post closing stock valuation at the end of each period thereafter