Why keep a stock register
Stock is usually the biggest asset of a trading or manufacturing business after cash, and the easiest to lose track of. A stock register records every movement – what came in, what went out and why – so you know what you have, what it's worth, and when to reorder. It is also the record your auditor and bank will ask for: CARO 2020 requires auditors to report on physical verification of inventory, and banks look at stock statements for working-capital limits.
How the register works
Each item is listed once with its unit, opening quantity and rate. Every movement is a row in Transactions: purchases, production and sales returns increase stock; issues to production, sales, returns to suppliers and negative adjustments reduce it. The Stock Summary adds them up for the period you choose and compares the closing quantity with each item's reorder level. Negative stock – usually a missed purchase entry – is flagged so you can correct it before it distorts the value.
Weighted average or FIFO?
AS 2 (and Ind AS 2) allow inventory to be valued on a first-in-first-out (FIFO) or weighted average cost basis, at the lower of cost and net realisable value. The free edition uses weighted average: (opening value + cost of receipts) ÷ (opening quantity + quantity received). It smooths out price changes and is simple to apply. FIFO assumes the oldest stock is used first, so closing stock is valued at the most recent purchase prices – closer to current cost when prices are rising. The Pro edition calculates FIFO alongside weighted average and shows the difference.
Slow-moving stock
Stock that has been sitting for months ties up cash and may need to be written down to net realisable value. The Pro edition's ageing splits the FIFO closing stock by the age of the receipt it came from – 0–30, 31–90, 91–180 and over 180 days – so you can spot slow movers, plan clearance and support any provision in the accounts.
Good habits
Give every item a unique code and use it consistently. Record movements daily, not at month end. Count stock physically at least once a quarter and post the difference as an adjustment with a reason. And at the start of each year, carry the closing quantity and average rate into the opening columns of a fresh file.
Free vs Pro
The free edition covers the item master, the movement register and the stock summary with reorder alerts. The Pro edition adds FIFO valuation, stock ageing, lot-wise detail and an item ledger (stock card) for any item.
Written by Prakash Bagchi, finance professional and founder of PB Lab. Last reviewed .