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What is the Difference between Opening and Closing inventory?
And Kindly tell that How opening and closing Inventory remains same in a single period?Please give me a pratical reason.
Opening inventory is the inventory at the start of the year. Closing inventory is the inventory at the start of the year.
The two will be the same if the units produced during the year is equal to the units sold during the year.
I am a little bit surprised that you are asking this, because you have presumably already taken F2 and F3 (or been exempted them, in which case you will have covered it at university).
The only place in F5 that it is really likely to be relevant in F5 is in budgeting, and I do explain in my free lectures on budgeting. (The lectures are a complete free course for Paper F5 and cover everything needed to be able to pass the exam well).
Yes I had already passed my F2 exam,But I am a little bit confused that if Production units are equal to sales units our closing inventory will be Nill
And With regard to opening inventory which is the closing inventory of previous year.How it Could be same as Closing inventory of this year..
For Example, Opening Inventory is 5000 and Production units are 8000 and Sales units are also 8000 units.Therefore our closing is 0 for this year but opening inventory is still 5000 units.
I am really not understanding your problem.
If the opening inventory is 5,000 units and you produce 8,000 units, then you now have 13,000 units that you are hoping to sell.
If the sales are 8,000 units, then the closing inventory will be the 13,000 units available less the 8,000 units sold, which comes to a closing inventory of 13,000 – 8,000 = 5,000.
Why one earth do you say that the closing inventory is 0? I do not think that you have read my previous reply properly!
The closing inventory will only change if the sales units are different from the units produced. Here, the sales are the same as the production and so the inventory will not change.= and will stay at 5,000.
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