Closing Stock
Also called: closing inventory, ending inventory
What is Closing Stock?
Closing stock is the quantity and value of inventory remaining at the end of a period, established by counting and valuing what is physically there. It appears as a current asset on the balance sheet.
Why Closing Stock matters
Closing stock is the single largest lever on reported profit in a trading business. Overstate it and profit rises artificially; understate it and a good month reads as a bad one.
Closing Stock formula
Closing stock = Opening stock + Purchases − COGS
The physical count is the authority; this identity is a cross-check.
How Closing Stock works in practice
Count physically rather than deriving it from the system, and value at cost, or net realisable value where that is lower. Damaged and expired goods should be written off rather than counted at full cost.
Frequently asked questions
Only for interim reporting. Period-end profit needs a real count.