Commentary

B2.611 Valuation of stock—general principles

Business tax
Business tax | Commentary

B2.611 Valuation of stock—general principles

Business tax | Commentary

Valuation of stock and work in progress

B2.611 Valuation of stock—general principles

The profits of a trade must be computed in accordance with generally accepted accounting practice (GAAP)1. This is subject to the rules which apply where profits are calculated on the cash basis for small businesses (see B2.112).

Goods bought or produced in a given trading period are not necessarily sold or otherwise disposed of in the same period. The trading profit, therefore, can only be ascertained by bringing into account as a credit the value of the stock unsold at the end of the period. This presupposes that

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