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Former Member
Aug 03, 2007 at 08:26 AM

Does the stock account balance show the profit & loss amount?

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When the goods are received from the vendors the postings are as follows :-

debit stock with the purchase price

credit vendors with the purchase price

However when a sales invoice is posted how will it decrease the stocks account? can someone tell me the postings for sales invoice? because if the postings for sales is going to be like this :-

credit stock with the sales price

debit customer with the sales price

then how can we calculate profit in the above situation? does it mean the net balance of the stock account will be the profit figure? because if the purchase price of the stock is 100 and the sales price is 150, then the stocks account will have a balance of 50 in the credit side in the above example.

does it mean the balance of stock account will be the profit amount?