Closing stock & cost of goods sold in your accounts
Fold inventory into your final accounts: closing stock on the balance sheet and cost of goods sold / gross profit on the P&L, at weighted-average cost — a presentation overlay that keeps the sheet balanced.
If you track inventory, Finocket folds your stock into the financial statements the way an accountant prepares final accounts: closing stock appears as an asset on the balance sheet, and the P&L shows cost of goods sold and gross profit — all at weighted-average cost.
How it's worked out
Stock is valued at weighted-average cost — the method accepted under Indian (Ind AS 2), Australian and US standards alike. From your stock ledger Finocket computes:
- Closing stock — the value of everything on hand as at the report date.
- Cost of goods sold = opening stock + purchases during the period − closing stock.
- Gross profit = sales − cost of goods sold.
Turning it on
On the profit & loss and balance-sheet screens there's an Include inventory switch. It's on by default once you have any stock movement, and you can turn it off to see the plain, posting-only statements.
What “presentation overlay” means
The inventory figures are computed from your stock ledger the moment you open the report — they don't create new ledger entries. Your trial balance, cash flow and audit trail keep showing only real postings, and the balance sheet stays balanced to the paisa. Because it reads your stock ledger, keep inventory receipts and sales up to date for the numbers to be right.
Access & control
Anyone who can see the statements sees the overlay — owners and assistants in full, an invited accountant read-only. Requires the Inventory module with stock-tracked products; without stock movements the switch simply has nothing to add.
Related: Inventory & stock, Financial statements.
Frequently asked questions
FIFO or weighted average — which valuation should I use for GST-era books?
Both are permitted under Ind AS 2 (LIFO is not). Weighted average is simpler, smooths out purchase-price swings, and is what Finocket uses: each receipt blends into a running average cost, applied consistently across your statements.
What is the formula for cost of goods sold?
Opening stock + purchases during the period − closing stock. Finocket computes each term from your stock ledger and shows COGS and gross profit on the P&L when Include inventory is on.
Why doesn't closing stock appear in my trial balance?
Because it's a presentation overlay, not a posted journal entry — the trial balance shows only real postings. The balance sheet and P&L present the stock figures on top without disturbing your audit trail.
My gross profit looks wrong — what should I check?
Usually missing purchase entries (stock added without cost), an unrecorded physical adjustment, or sales of untracked items. Fix the stock ledger — the overlay recomputes instantly.
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