In Malaysia, most of the local Accounting and Inventory software will be using the following formula to calculate the Stock valuation.
Cost of Goods in the Profit & Loss
Opening Stock + Purchase - Closing Stock - Purchase Return
The following are the steps to adjust the stock
a) In the end of each financial year 2022, create a journal entry to CR a closing stock (Cost of Value type) and DR to Stock valuation account (Current Asset type)
b) In the beginning of the financial year 2023, create a journal entry to DR a opening stock (Cost of Value type) and CR to Stock valuation account (Current Asset type).
c) In the 2023 P&L, the opening stock will be appearing in the COGS.
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