Dear Sir , When I saw our company's financial result , ( increase ) decrease in stock in trade WIP . In that line in the brackets amounts are there. I want to ask you what does it mean and decrease in stock in trade also. 2. And Why it is in brackets. After studying all the statement of Accounts I could not understand this . Please clarify
I think this stock showing the consumption part of finished goods or some time company may purchase goods for sale. Increase or decrease in stock in trade will show in expenditure side.
1st reason :
Suppose company bought new goods for sale, so its cost will be the expenditure of company. It means increase in stock in trade will be expenditure.
Purchase or increase in stock in trade = closing stock in trade - Opening stock in trade
2nd reason :
If stock in trade is decreased. It means, company did not produce but consumed of previous finished stock. At that time we also record the cost of that decrease stock in trade in expenditure side because its sale price will be shown in revenue side.