#1 – When different types of opening stock are mentioned. Opening Stock Formula = Raw Material Cost + Work in Progress Values + Finished Goods Cost
Full Answer
How do you calculate opening stock in accounting?
Opening Stock Formula = Raw Material Cost + Work in Progress Values + Finished Goods Cost. #2 – When current year closing stock is given along with sales and cost of goods sold and gross profit figures: Opening Stock Formula = Sales – Gross Profit – Cost of Goods Sold + Closing Stock.
What is an example of a wide assortment strategy?
For example, a grocery store that provides a lot of different products, but only stocks one or two brands for each type of product, is employing a wide assortment strategy. 2. Deep assortment A deep assortment strategy aims to provide a large number of options within a particular product category.
What is a product assortment strategy?
Also called a "product assortment strategy," it is a strategic tool that retailers use to manage and increase sales. The strategy is made up of two major components: The depth of products offered, or how many variations of a particular product a store carries (e.g. how many sizes or flavors of the same product).
How do I create a closing stock?
To create your Closing Stock, repeat the steps and use a new nominal code, for example, 5201. If you have a value for opening stock on your balance sheet stock nominal ledger account, code 1000, you need to post a journal to move this to your profit and loss opening stock account, 5200.
How do I write an assortment plan?
Have a look at the following steps.Research and build a plan. ... Store clustering. ... Decide the breadth and depth of assortments. ... Create a visual merchandising plan. ... Double-check and execute the plan. ... Retain your loyal customers. ... Control inventory spending. ... Stand out from competitors.More items...•
What is product assortment example?
What is an example of product assortment? A soft drink company is a good example of product assortment. These companies can offer a large variety of product lines that consist of products that come with many different flavors, sizes, and colors.
What is inventory assortment?
Product assortment, also known as product or merchandise mix, is the variety of merchandise that a business offers to customers. In the eyes of a customer, this assortment defines a retailer's image and why they shop there. Product assortment will also determine a company's dependence on particular inventory.
How do you write an open-to-buy plan?
You can start by creating a six-month open-to-buy plan in a spreadsheet....For each product you're forecasting inventory budgets for, add the following rows for each month or week:Planned sales.Planned markdowns.Planned end of month inventory.Planned beginning of month inventory.OTB dollars.
What does assortment mean in retail?
An assortment strategy in retailing involves the number and type of products that stores display for purchase by consumers. Also called a "product assortment strategy," it is a strategic tool that retailers use to manage and increase sales.
What are the types of assortment?
Types of Assortment StrategiesWide assortment. A wide assortment strategy is used when retailers aim to offer a lot of different product lines or categories, but with lesser depth in each category. ... Deep assortment. ... Scrambled assortment. ... Localized assortment. ... Mass-market assortment.
What is an example of assortment?
Assortment is defined as a group of things that vary in type. An example of an assortment is a box of chocolates with varying flavors and kinds.
What are the 5 steps in preparing an assortment plan?
In our last article on assortment management, you might read about 5 core stages of this process:assortment strategy development;assortment planning;current assortment update;assortment policy analysis;inconsistencies elimination.
How do you do an assortment analysis?
4 Ways to Inject Strategy Into Your Efficient Assortment Analysis.Incorporate Shopper Into Data. Understanding the category structure is critical for assortment analysis. ... Incorporate Retail Store Clusters. ... Consider Category Role and Strategy Assignments. ... Category Performance Measures / Category.
What is an assortment plan?
Assortment planning is defined at its simplest, as the process retailers use to decide which products and variations to carry and sell in an upcoming season. Retailers plan their assortment along two dimensions: Breadth/width: the number of product types and categories.
What is the first step in developing an assortment plan?
What is the first step in developing an assortment plan? Determine the amount of planned open-to-buy. Identify the selection factors that are most important to the customer.
What does OTB mean in merchandising?
Sample Six-Month PlanSix-Month OTB PlanJuneNovemberBeginning of Month Inventory $155,000165,000Sales47,00048,000Markdowns1,0001000Open-to-Buy43,00037,0001 more row•Apr 8, 2020
What Is an Assortment Strategy?
An assortment strategy in retailing involves the number and type of products that stores display for purchase by consumers. Also called a "product assortment strategy," it is a strategic tool that retailers use to manage and increase sales. The strategy is made up of two major components:
Why is assortment strategy only for brick and mortar stores?
Originally, assortment strategy referred only to brick-and-mortar stores because the strategy's components of depth and breadth had a lot to do with physical space and the visual and tactile interaction between consumer and product.
How to stimulate impulse buying?
Grouping related items together strategically, whether or not they are necessities, is a common way to stimulate impulse buying : 1 By placing garden hoses near sprinklers and other lawn-care products, a retailer could possibly drive more into a customer’s basket. Likewise, installing a luxurious patio dining set—complete with attractive outdoor dishware and bar accessories—in the middle of the more prosaic yard-care products could even send some customers scurrying to the housewares section of the store. 2 A presentation of flashlights—or any battery-driven product—could include a nearby display of the batteries needed to use the product. Or a manager could locate the batteries near the check-out counter to remind the customer before he leaves the store that the flashlight won't work without them.
What is a strategically arranged product assortment?
A strategically arranged product assortment can upsell customers on supplemental items as they search for the item that brought them to the store.
How do retailers target their customers?
By grouping together items that they believe will appeal to certain types of customers, retailers may fine-tune their assortment strategies to target consumers' demographic profiles. If a retailer wants to attract customers who are new parents, for example, it might fill the shelves with infant apparel from trendy brands, along with toys, bedding, and other products new parents need.
What happens if you mix less popular items with popular items?
If less-popular items are mixed in with popular items, for example, they could detract from the more-popular items' appeal. Or, if the assortment is too vast, customers may have difficulty finding the item they are seeking. Overwhelming shoppers with too many buying options can be counterproductive and discourage customer engagement.
Where did product assortment start?
Product assortment strategies got their start in the context of brick-and-mortar stores , but have since been carried over successfully to e-commerce platforms.
How to decide if you need to expand your assortment?
Dig through your reports and pay close attention to what’s selling , then use that information to decide if you need to expand or deepen your assortments.
How to have an optimal product assortment?
The first step to having an optimal product assortment is to recognize who you are and what your brand means to your target customers.
What is the most important thing to do in retail?
Getting your product assortment right is one of the most important — yet trickiest — things to do in retail. Having a good merchandise mix requires both an art and a science. You need data, a deep understanding of your customers and trends, as well as some foresight and intuition into what your customers want.
What games do you need to have a deep assortment of cards?
For instance, if you cater to die-hard fans of card games like Magic: The Gathering or Pokemon, you’ll want to have a deep assortment of cards within the key games that your customers love, as opposed to say, stocking a wide variety of products beyond games.
Why did Crate and Barrel sell more bread makers in April 2020 than all of 2019?
The homeware retailer Crate and Barrel, for example, sold more bread makers in April 2020 than all of 2019 because more people were staying home and baking. Retailers that adapted and came up with assortments based on the needs of shoppers were able to capitalize on consumer demand.
What is the key to Strategem's success?
One of the keys to Strategem’s success? Its deep product assortment. “We make sure that we always have a good range of the current most popular gaming products,” shares Mark Lester, founder at Stratagem Cards and Games. “Our range of D&D products, X-Wing and Dice are the best in Perth.”
When to carry a wider assortment of clothing?
For instance, during the warmer season, you’ll want to carry a wider and deeper assortment for summer apparel, while scaling back on outerwear. If a holiday or shopping event is coming up, you’ll need to modify your assortment accordingly.
What is assortment planning?
Assortment planning requires collecting large amounts of data around your assortments, as well as those of competitors. It’s not just about data collection, though. You need to consider how to use that data to drive sales. Here are some things to keep in mind while planning your assortment.
What is the process of determining the right products and right quantities to meet consumer demand?
Stores need to know how to display the products and drive shoppers to the relevant areas. Assortment planning is the process of determining the right products and right quantities to meet consumer demand.
Does assortment planning happen in isolation?
Assortment planning doesn’t happen in isolation. You should always be doing the next cycle of planning with historical data at your disposal. Looking at past years’ and seasons’ assortments and their performances will help you set realistic targets for the coming season.
Does assortment planning involve in store operations?
Assortment planning doesn’t only involve in-store operations. Your eCommerce and online marketplace strategies are also deeply impacted by the decisions made when planning your assortment. Any omnichannel retailer should be planning on all fronts.
What is an assortment strategy?
Assortment strategies refer to the plans that retailers (in-store and e-commerce Introduction to E-commerceE-commerce refers to commercial transactions of goods or services conducted over the internet. E-commerce companies sell various products and services.) use to determine the optimal product mix for their daily inventory. They are important to the retail industry since customers directly interact with the product mix on display and make purchase decisions based on what they see.
What is wide assortment?
A wide assortment strategy is used when retailers aim to offer a lot of different product lines or categories, but with lesser depth in each category. It aims to provide more variety in the types of product lines offered but does not provide a high number of products in each product line.
Why do retailers use scrambled assortment?
Retailers using scrambled assortment strategies aim to offer products that are outside of their core business operations in order to attract more clients from different markets.
Why is Intro Guide important?
Intro Guide. ) use to determine the optimal product mix for their daily inventory. They are important to the retail industry since customers directly interact with the product mix on display and make purchase decisions based on what they see.
Do clothing retailers stock in spring?
Similarly, a clothing retailer is likely to stock different clothes in spring and in summer (probably more beachwear) than it does in winter (more jackets). This caters to the public demand and increases sales. Similarly, in supermarkets, complementary goods, such as toothbrushes and toothpaste, are assorted strategically so that customers are persuaded to buy more than they intended to.
Is assortment strategy disadvantageous?
However, assortment strategies can be disadvantageous if the product mix and allocation doesn’t appeal to the population visiting the store (or the website, for e-commerce retailers Financial Statements Examples – Amazon Case StudyFinancial statements show the financial performance and strength of a company. The three core financial statements are the income statement, ). For example, offering too much variety within a product line can frustrate customers because it makes it harder to make a decision. At the same time, providing too little variety can be disappointing to some customers and can negatively impact sales revenue.
What is A Stock Certificate?
Stock certificates are like receipts that declare a person's partial ownership in a company.
How do shares work?
How Shares Work. Shares describe the degree of ownership one has in a company. Ownership isn't just defined by action available in a corporation, but the percentage of profit one has once joined and active. All corporations function as a collective of shareholders and their respective percentage of values.
Why is a corporate stock certificate and ledger useful?
This is part of the reason why a corporate stock certificate and ledger and useful. As the member count increases so do the needs for managing the number of members and their profit shared. Members portion of ownership is both their credit and their debt - as is often the case with the flipped-term.
What is non digital stock certificate?
A non-digital stock certificate comes in a piece of paper complete with printed signatures from higher-ups. This form of receipt/contract between an owner and a company comes in different forms depending on the owner and the type of company being represented.
How many corporate officers do you need to add a stamp?
You need signatures from at least two corporate officers to keep moving forward. Once you've done this, it's time to emboss the area where you add your corporate stamp. You can again find this in your incorporation book.
What to list in a company listing?
The first items list your company's name and address. If these aren't already printed, do so. As a connecting item, list the buyer's address and the number of shares they're purchasing.
What is share structure?
There are also share structures, that describe the percentage of ownership one gets when buying a segment of a company. This depends on the corporations choice.
What is a product assortment strategy?
In retail, assortment refers to the entire catalogue of products and variations that a retailer carries on their physical (and digital) shelves. Assortment is a bit like a retailer’s finger print — no two retailers have the same exact assortment.
Why is an assortment strategy so important?
Your product assortment is the foundation for financial success but also a source of business risk.
How many SKUs are in a 1,000 store assortment?
The technology of retail assortment planning has evolved far beyond traditional spreadsheets. Optimizing the assortment of a 1,000-store retailer that carries 10,000 SKUs requires deeper analysis than any spreadsheets can deliver.
How do best in class retailers gain a market advantage?
Best-in-class retailers gain a market advantage by creating effective assortment strategies. By leveraging advanced analytical planning tools, they clearly lay out the mix of products and quantities to carry in each location that will produce the biggest return on their investments.
Why is wide assortment breadth important?
Wide assortment breadth allows retailers to appeal to bigger demographics, but make it more difficult to appeal to more dedicated and loyal niche markets.
What is cookie cutter assortment?
A cookie-cutter assortment causes expensive stock-outs and overstocks across the business. Clustering retail locations by common attributes let you tailor the assort ment more closely.
Why is product assortment important?
Creating a product assortment strategy is necessary for retailers to have a holistic, long-view plan of their business. But this is easier said than done. There are a variety of critical tasks that are competing for a retailer’s attention, including inventory levels, budgets, allocation, etc.
Where to find unsold stock on the balance sheet?
You'll see this value in the Equity section of the Balance Sheet Report, leaving your unsold stock as an asset on nominal ledger account 1000.
What is gross profit without stock journal entries?
A gross profit calculation without stock journal entries would be sales minus purchases.
Can you produce profit and loss report?
You can now produce the Profit and Loss Report from Reporting.
Do you have to have a stock journal on your balance sheet?
You might not have any values on your balance sheet stock account, for example, if this is the first month you’ve purchased any stock. If you don’t, record the purchase as normal then the first journal you should post is a closing stock journal. For more information, please see End of month 1 – Closing stock journal.
Types of Opening Stock
The Formula For Calculating Opening Stock
- Depending on the variety of data available, It can be calculated differently. Some formulas are presented below: #1 – When different types of opening stock are mentioned. Opening Stock Formula = Raw Material Cost + Work in Progress Values + Finished Goods Cost #2 – When current year closing stock is given along with sales and cost of goods sold and...
Advantages
- Some of the advantages are as follows: 1. Holding opening stock can help an organization meet its fluctuating market demands and cater to its customers’ needs. 2. It helps an organization ensure better services/supply to its customers and hence increases customer satisfaction. 3. The efficient supply of raw materials ensures smooth operations without hampering production.
Limitations of Opening Stock
- Holding opening stock does have advantages, but at the same time, there are many disadvantages as follows: – 1. Inventory Holding Cost:The number of unsold goods/materials during the previous financial year. Holding inventory leads to increased costs like storage area rent, interest on the money value of inventory, etc. 2. Obsolescence Risk:Holding inventory alway…
Important Points
- According to various amendments in guidelines, accounting assumptionsAccounting AssumptionsAccounting assumptions are a set of rules that ensures an organization's business operations are conducted...
- Not only a dealer or manufacturer but now a service provider is also required to ensure proper accounting of opening stock. For example, A Chartered Accountant/ Certified Public Account…
- According to various amendments in guidelines, accounting assumptionsAccounting AssumptionsAccounting assumptions are a set of rules that ensures an organization's business operations are conducted...
- Not only a dealer or manufacturer but now a service provider is also required to ensure proper accounting of opening stock. For example, A Chartered Accountant/ Certified Public Accountant must mai...
- Valuation of opening inventory is critical as it directly affects an organization’s profits.
- Not only products in which the organization deals but also other assets like spare parts and inventory of capitalized assets are also disclosed as inventory;
Conclusion
- Opening Stock can be defined as several goods an organization holds at the initiation of any accounting periodAny Accounting PeriodAccounting Period refers to the period in which all financial transactions are recorded and financial statements are prepared. This might be quarterly, semi-annually, or annually, depending on the period for which you want to create the fi…
Recommended Articles
- This has been a guide to opening stock and its meaning. Here we discuss its formula, three types of opening stock (Raw material, work in progress, finished goods), and examples, advantages, & disadvantages. You may learn more about accounting basics from the following articles – 1. Construction Work in Progress 2. Holding Cost 3. Phantom Stock Types 4. Closing Stock Meani…