can anyone explain me how value of output is equals to sales + change in stockand also why do we include change in stock..?can anyone please explain how change in stock is closing stock-opening stock with an example..

Question

Answer

Value of output is and output which helps to know About the remaining value of a any product of a company. this can be done at the last of preparation of financial statements which helps to tell about the remaining value of a product. so to find out value of output the formula is:-

VOO= sales + change in stock.

you can easily seen that it can be measured at the end of accounting year. so change in stock can be measured after preparing this.
as it helps to find out remaining value of stock in an organisation.
the formula of change in stock is:-
CIS=closing stock - opening stock. we include change in stock to know that how the value of stock changes at the end of accounting year. we do cl - op. to find out actual change in stock during a financial year of a company.
for example:-
ram is a businessman who buys goods in cash. it means that cash gone and sales increases. so the entry is :- sales a/c Dr.
To cash A/C.
hence at the 1 April it's opening stock is 5lakh, but only 3lakh goods are sold. so at the last 2 remains known as closing stock. formula:-change in stock = op. -closing stock. means 5lakh - 3 Lakh =2lakh.

thank you!

Answer

Explanation of Output Value Calculation:
- The value of output in an accounting context is calculated by adding the total sales revenue generated by a business to the change in stock value over a specific period.
- The formula is: Value of Output = Sales + Change in Stock

Importance of Change in Stock:
- Change in stock is included in the calculation of output value to account for the impact of inventory levels on a company's financial performance.
- It helps in determining the total value of goods produced or sold by a business during a particular period.

Calculation of Change in Stock:
- Change in stock is calculated as the difference between the closing stock and the opening stock for a given period.
- The formula is: Change in Stock = Closing Stock - Opening Stock

Example:
- Let's consider a hypothetical scenario where a company has an opening stock value of $10,000 and a closing stock value of $15,000.
- To calculate the change in stock, we subtract the opening stock from the closing stock: $15,000 - $10,000 = $5,000.
- If the company's total sales during the same period were $20,000, then the value of output would be: $20,000 + $5,000 = $25,000.
In conclusion, the value of output is calculated by adding sales revenue to the change in stock value, as it provides a more accurate representation of a company's financial performance by accounting for inventory fluctuations.

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