Stock Transactions

Stock refers to goods that have been bought by the intention of selling to customers.  It is a Current Asset.

Stock Transactions are maintained in four different accounts, which can only be used for goods moving in and out of the business.

Goods Moving IN to Business (Increase of Asset - Debit)
  1. Purchases (Goods bought from Suppliers)
  2. Sales Returns/Return Inwards (Goods returned by Customers)
Goods Moving OUT of Business (Decrease of Asset - Credit)
  1. Sales (Goods sold to Customers)
  2. Purchase Returns/Return Outwards (Goods returned to Suppliers)

Therefore, the Four Ledger Accounts
  1. Purchases (Increase of Asset - Debit)
  2. Purchase Returns/Return Outwards (Decrease of Asset - Credit)
  3. Sales (Decrease of Asset - Credit) 
  4. Sales Returns/Return Inwards (Increase of Asset - Debit)