Accounting

Opening Stock

The value of inventory at the beginning of an accounting period

Definition

Opening stock, also known as beginning inventory, is the total value of goods and materials a business holds at the start of a new accounting period. It is essentially the closing stock from the previous period carried forward. Opening stock is a critical figure in calculating cost of goods sold (COGS) and gross profit. Under Indian accounting and GST regulations, businesses must accurately record opening stock at the beginning of each financial year starting 1st April. The value of opening stock appears on the debit side of the Trading Account. For businesses that are newly registered under GST, the opening stock may include input tax credit claims on existing inventory. Maintaining accurate opening stock records ensures proper profit calculation, correct GST return filing, and reliable financial statements for bank loans and investor reporting.

How It Works

  1. 1At the end of each accounting period, you calculate and record the closing stock value of all inventory on hand.
  2. 2On the first day of the next period, this closing stock value is carried forward as the opening stock — no separate entry is needed if you use continuous stock tracking.
  3. 3Opening stock is a key input in the cost of goods sold formula: COGS = Opening Stock + Purchases - Closing Stock.
  4. 4For a new business starting fresh, the opening stock on day one is zero unless you are bringing in existing inventory from a previous setup.

Example

A garment shop in Delhi had 500 shirts in stock on 31st March valued at Rs. 2,50,000. On 1st April (the new financial year), this same Rs. 2,50,000 becomes the opening stock. If the shop purchases Rs. 10,00,000 worth of new shirts during the year and the closing stock on 31st March next year is Rs. 3,00,000, then COGS = Rs. 2,50,000 (opening) + Rs. 10,00,000 (purchases) - Rs. 3,00,000 (closing) = Rs. 9,50,000.

How Stock Register Handles This

  • Carry forward closing stock as opening stock automatically when you start a new financial year — no manual data entry required
  • Enter opening stock quantities and values for each item when setting up the app for the first time with existing inventory
  • View opening stock reports by item, category, or godown for the start of any period to verify your books
  • Compare opening stock with closing stock across periods to track how your inventory levels are changing over time

Formula

Opening Stock = Previous Period's Closing Stock

Example: If your closing stock on 31st March was ₹4,50,000, then your opening stock on 1st April (new financial year) = ₹4,50,000. This value is used in your COGS calculation: COGS = ₹4,50,000 (opening) + ₹12,00,000 (purchases) - ₹5,00,000 (closing) = ₹11,50,000.

Related Terms

Closing StockStock RegisterInventory

Related Guides

Stock Overview Guide

Frequently Asked Questions

How do I enter opening stock when I start using Stock Register for the first time?

When you set up the app, you can enter the current stock quantity and value for each item as opening stock. This ensures your inventory records are accurate from day one. You can enter this while adding items or through a bulk import.

Does opening stock change during the financial year?

No, opening stock is a fixed figure recorded at the start of the period and does not change. All purchases and sales during the year affect only the current stock and closing stock. The opening stock remains the same throughout the year for accounting purposes.

What happens if my opening stock does not match last year's closing stock?

This is a serious discrepancy that must be investigated. Common causes include stock write-offs, unrecorded damage, or errors in the previous year's closing stock calculation. You should reconcile the difference with your accountant and pass an adjustment entry if needed.

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