Trading Stock Part 1

The trading stock of a business comprises raw materials and goods purchased or produced for sale. The true profit of a business is not merely the excess of sales over expenses for the year. From this figure one must subtract the value of opening trading stock, and to it add the value of closing stock. Trading stock includes anything purchased or manufactured, and anything acquired for purposes of manufacture, sale or exchange, in the carrying on business. Trading stock is valued at the end of the year by cost price, market selling value, or replacement price. The cost of the stock may be estimated, but estimates must be an attempt to find the true value of the stock