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| | | | | 9. Stocktaking – Why and How
| | | |  The Bookkeeping Act § 11 states that the Annual Accounts must specify all balance sheet items, unless they are considered insignificant. An item that is significant for many businesses is the inventory. Consequently, the business owner must count the inventory (stock) he/she possesses by 31.12.
Depending on the size of the inventory, counting may be a time consuming exercise. However, sound stock control methods may save you time. Consider when counting can be carried out, especially with respect to running business and opening hours. If the shop keeps open, it may be difficult to keep track of goods taken from the stock while counting is in progress. Many will therefore prefer counting after opening hours or during the first weekend or holiday. Nevertheless, the count must coincide with the closing of the accounting year, i.e. 31.12.
The counting must be documented by record sheets, re the Bookkeeping Regulations § 6-1 (in Norwegian).
The record sheets must show specified lists of the stock items, quantity and value of each item, and the sum for the specified assets. In some instances, one distinguishes between accounting and tax assessment values, which may differ. However, bookkeeping eligible businesses according to the Bookkeeping Act § 2 may provide the tax assessment values only. The taxation legislation does not allow write-down of the inventory due to price reduction or old stock considerations, but such write-down may be carried out in the annual accounts if deemed correct from a business economics perspective. In such cases, the value of the inventory listed in the annual accounts will differ from the tax assessment value.
Things to remember:
- Plan the inventory counting well in advance, and tidy up the store rooms.
- Produce the record sheets from the inventory system and make sure all types of goods are included.
- Produce stock control guidelines if more than one person is involved.
- Use pre-numbered record sheets, alternatively, use a stock control book.
- Make sure to know at all times what is already counted.
- List all items, including the old stock.
- Be meticulous about the timing of the counting:
- If counting is done before 31.12, remember to add goods received between counting and 31.12.
- If you count after 31.12, subtract goods bought between 31.12 and counting.
- Note that only goods bought and not sold by 31.12 are included.
- The record sheets must be dated and signed by the person who performed the counting.
- The goods are normally valued at acquisition price (price of goods plus possible cost of purchasing).
- In manufacturing enterprises the inventory is divided into raw materials, semi-manufactured goods, goods in manufacturing process and finished goods.
- The record sheets are vouchers that must be stored for 10 years.
Sample Stocktaking Record Sheet
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Acknowledgements
This guide is a translation of the Norwegian Accounting Guide (Regnskapsguiden) found in www.bedin.no. Translation to English by Snorre Jørgensen, with valuable assistance from Hanne Rossvoll Larsen. Nevertheless, all mistakes are mine and mine only. We will emphasize that the information in this guide is introductory. Additional information can be found in the web links we have included with the text. However, at the time of writing the acts referred to are not available in English.
Copyright:(c)Bedin. | | | | | | | | | | | | |
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