Inventory vs Stock
Inventory and stock hold great significance for any manufacturing company. Inventory includes raw materials, goods in production, and finished goods that are all considered to be part of a company’s assets as they are either ready or will be ready fro sale to generate revenue for the company. Turnover of inventory is the major source of revenue for a company and reflects a potential source of earnings for the shareholders as well. There is another term stock that refers to all the raw material, finished goods and those that are in the warehouse ready to be delivered to the customers or clients. This makes the situation very confusing as many cannot make out differences between inventory and stock. This article tries to find out the differences between stock and inventory to clear all the doubts.
Stock pertains to all unfinished, in production, under quality inspection, and finished goods in ware houses waiting to be delivered to customers. Stock is measured not just in quantity but also in terms of their monetary value. It is true that accountants use the word inventory to discuss goods for sale, but even those who do not have stocks to sell have inventories that they maintain. While the inventory of a retailer exists in shops where it is accessible to customers, the inventory of wholesalers and distributors exists in warehouses. Another point of difference is that inventory includes stock and other assets such as plant and machinery. On the other hand, stock pertains to goods only whether it is in the form of raw material or finished goods. This is perhaps the reason why in a balance sheet there is opening stock and not inventory whereas there is depreciation in assets that is taken up in case of inventory.
Difference Between Inventory and Stock
• Stock and inventory are used interchangeably which is not correct
• Stock pertains to goods only, both in terms of quantity as well as its monetary value
• Inventory is the sum of stock and assets that include plant and machinery