Stock management is the function of understanding the stock mix of a company and the different demands on that stock.
The demands are influenced by both external and internal factors and are balanced by the creation of purchase order requests to keep supplies at a reasonable or prescribed level. Stock management is important for every other business enterprise.
ADD Stock at beginning of period.
ADD Stock purchased during the period.
AVERAGE total cost by total qty to arrive at the Average Cost of Goods for the period.
This Average Cost Price is applied to all movements and adjustments in that period.Ending stock in qty is arrived at by Applying all the changes in qty to the Available balance.
Multiplying the stock balance in qty by the Average cost gives the Stock cost at the end of the period.Using the perpetual method, the calculation is done upon every purchase transaction.