In First In First Out (FIFO) accounting, transactions can be quite complex and it can get messy if not managed properly. Hence, one option of keeping track of inventory is the stock card.
Stock card a sheet that tracks all your purchases, sales, returns, and other drawings. It tracks the unit price and inventory counts.
Let’s consider the following transactions for our grocer. For simplicity, the focus is on only one product, sour gummy bears.
The transactions are for July, and to further help in understanding, we’ve included only the unit price of the goods (how much it cost us per unit). You will have to log the actual sale price in other accounts, but the focus here is solely on the stock card.
Fill Out the Card
Typically, if you look at the header for the stock card, it has more categories than the table. This would usually include headers such as ‘In’ and ‘Out’ with subcategories under each and ‘Balance’ to show where you are at with quantities and costs.
Using this stock card, you’ll get a detailed understanding of your stock movement and it’s associated cost. These would then allow you to calculate your Cost of Goods Sold as and when it happens.