A physical stocktake involves a manual count of all inventory items in a firm, typically conducted biannually. This process helps reconcile discrepancies between actual stock and computer records, addressing issues like theft, damage, and misplacement. The final inventory value is reported in the current assets section of the balance sheet.

1. 9.2
THE PHYSICAL STOCKTAKE

2. © Michael Allison, Trinity Grammar School. Author’s permission required for external use
 A physical stocktake is a physical count of all the inventory in a firm – the
store’s workers manually count every item of stock in the store
 E.g. at Twice a year (end of December and end of June) a business:
 Shuts at 6pm
 Staff are brought in to manually count the stock at night
 All stock is counted by 9am the next morning
9.2 THE PHYSICAL STOCKTAKE

3. © Michael Allison, Trinity Grammar School. Author’s permission required for external use
Balance Sheet as at 31 December 2015
Current Assets $ $ Current Liabilities $ $
 A physical stocktake is done
using stock sheets:
 Each item is listed on the
stock sheet
 The quantity of each item is
determined by manually
counting how many are in the
store
 The cost price of each item is
determined
 A final value of inventory is
determined and this is listed
in the Current Assets section
of the Balance Sheet as
“Inventory” or “Stock”
Stock Item Quantity Cost $ Value $
Stock Sheet
Stock Item Quantity Cost $ Value $
Cricket bats 50
Cricket balls 100
Soccer balls 30
Hockey sticks 15
Stock Item Quantity Cost $ Value $
Cricket bats 50 40
Cricket balls 100 18
Soccer balls 30 22
Hockey sticks 15 16
Stock Item Quantity Cost $ Value $
Cricket bats 50 40 2000
Cricket balls 100 18 1800
Soccer balls 30 22 660
Hockey sticks 15 16 240
Total Stock 4700
Balance Sheet as at 31 December 2015
Current Assets $ $ Current Liabilities $ $
Inventory 4700
9.2 THE PHYSICAL STOCKTAKE

4. © Michael Allison, Trinity Grammar School. Author’s permission required for external use
 Why do firm’s do a physical stocktake
when they have computers to record how
much stock is on hand?
 Because the computer records aren’t
always correct due to:
 Theft of stock
 Damage of stock
 Misplaced stock
 Lost stock
9.2 THE PHYSICAL STOCKTAKE

5. © Michael Allison, Trinity Grammar School. Author’s permission required for external use
 So a physical stocktake is used to reconcile the inventory records of a
business – to match up:
 What should be there (according to the computer) with
 What is actually there (as per the physical stocktake)
8 footballs according to
computer
6 footballs physically
counted in store
So what
does this
mean?…
2 footballs are
missing…
9.2 THE PHYSICAL STOCKTAKE

6. © Michael Allison, Trinity Grammar School. Author’s permission required for external use
 What does the term stocktake sale mean?
9.2 THE PHYSICAL STOCKTAKE

7. © Michael Allison, Trinity Grammar School. Author’s permission required for external use
TASK
In-class Homework
SQ2 X
Ex9.1 X