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Accounting & Disclosure Error: Opening Stock

Sohini Chakraborty
  • Updated

Opening Stock

Issue

Opening Stock in the Profit and Loss account does not equal comparative year Balance Sheet Stock.

This error occurs when there is a mismatch between the postings to the relevant stock codes in the current and comparative year.

To resolve this issue, please follow the steps below:

Resolution

  1. There are only 7 nominal codes which are used in resolving this error.

    Those are nominal’s 100, 701, 702, 702.01, 703, 704 and 705.

  2. Amounts posted nominal 100 in the current year, must match the combined total of amounts posted to 701, 702, 702.01, 703, 704 and 705 in the comparative year. The same would apply for amounts posted to 100 in the comparative year, they must match the combines total of amounts posted to 701, 702, 702.01, 703, 704 and 705 in the pre-comparative year.
    Formula as follows; (CY = Current Year, PY = Prior Year).

    100 (CY) = 701 + 702 + 702.01 + 703 + 704 + 705 (All PY)

    Formula for comparative year; (CompYr = Comparative Year, PComyYr = Pre-comparative Year)
    100 (CompYr) = 701 + 702 + 702.01 + 703 + 704 + 705 (All PComyYr)
    Here we can see that € 985 has been posted to nominal 100 in the current year and a combined total of € 700 has been posted to 701 and 702 in the comparative year. This leaves a mismatch of € 285.

  3. In order to resolve this difference, either the closing balances of the comparative year must be adjusted to € 285 using the comparative tool, or alternatively the balance in nominal 100 should be adjusted using a journal in the current year.

  4. Nominals 100 and 701.01 are not included in the calculation as these nominal codes are to be used for non-trading stock. If you have an amount posted to 701.01 in the comparative year, the same amount should be posted to 101 in the current year. Avoid using nominals for trading stock in conjunction with non-trading stock.
  5. If new nominal codes have been created within this range, right click on the nominal code and select Open. Check for the Copy from Code option, if the copy from code falls within the range listed at step 1 you will need to include the balance of that nominal code in the calculation.

 

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