2nd Year Business Studies 8th October 2012

Thought of the day……. You cannot plough a field by turning it over in your mind (Author Unknown) You cannot learn Trading Accounts by just reading the book, DO THE QUESTIONS!!!! (Ms. McAuliffe)

Stock 3 reasons for keeping stock Time – it helps avoid delays when orders are placed. Uncertainty – You can’t be 100% sure of how many units you will need. Having stock helps if you get an unexpected large order. Economies of Scale – sometimes it is cheaper to produce larger amounts together than smaller amounts separately.

Deciding on a stock level Is the product going to be gone off(if food) or out of fashion shortly? What amount do we expect to sell? How quickly can we make extra units if a large order is placed? What will happen if we can’t sell all the units we make?

Stocktaking Stocktaking means counting the amount of stock in storage at a particular time. Why would a business do a stock-take?

Valuing Stock There are two amounts assigned to goods: A Cost price A Selling price Goods are always valued at the lowest price. This is usually the cost price but can sometimes be the selling price When would this happen?