7. Change in stock (only if there is an increase in stock at the end of the financial year)
The variation in stock is the difference between the initial and final stock (merchandise and raw materials) of the accounting period, valued at their acquisition price.
The purpose of the variation in stock is to determine the consumption of stock for the year and to adjust the result. Therefore, when the valuation of stock at the beginning of the year is lower than at the end of it, this difference must be reflected as income since it means that part of the stock acquired in the year has not been consumed at the end of it.
Unlike the above, when the valuation of the initial stock is greater than the valuation of the final stock, this negative variation must be reflected as an expense. In this case, this variation means that more stock has been consumed in the year than was acquired throughout the year, also considering the stock that appeared in the inventory on 1 January.
See within "Tax-deductible expenses" the section on “ Change in stock ” as well as the registration and valuation rule 10 of the General Accounting Plan, approved by Royal Decree 1514/2007, of November 16 ( BOE of November 20), dedicated to the valuation of stock. See also the Resolution of April 14, 2015, of the Institute of Accounting and Auditing of Accounts, which establishes criteria for determining the cost of production.
Example:
Mr. PXR, a company dedicated to the sale of household appliances, has stock in its warehouse valued at the beginning of the 2022 financial year at an amount of 40,000 euros. At the end of the year, the count and inventory of the stock in the warehouse reaches a value of 60,000 euros.
Determine whether the valuation of inventories should appear as income or expense for the year to determine the net income of the activity.
Solution :
Final stock: Assessment: 60,000
Initial stocks: Rating 40,000
Stock variation (60,000 – 40,000) = + 20,000
Since the final inventory of stock is higher than the initial one, the difference (20,000 euros) will appear as income for the year for this concept. This means that during the year, 20,000 euros less than the stock acquired during the year was consumed, which ultimately resulted in an increase in final stock of 20,000 euros.