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UK GAAP pp 795-844 | Cite as

Stocks and long-term contracts

  • Mike Davies
  • Ron Paterson
  • Allister Wilson

Abstract

Accounting for stock involves the determination of both the cost of goods sold during the period and the amount that should be carried forward in the balance sheet as stock to be matched against future revenues. This is because the determination of profit for an accounting period requires the matching of costs with related revenues. The cost of unsold or unconsumed stocks will have been incurred in the expectation of future revenue, and when this will only arise in future periods it is appropriate to carry forward this cost to be matched with the revenue when it arises; the applicable concept is the matching of cost and revenue in the year in which the revenue arises rather than in the year in which the cost is incurred.

Keywords

Balance Sheet Replacement Cost Current Asset Historical Cost Base Stock Level 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

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References

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Copyright information

© Ernst & Young 1997

Authors and Affiliations

  • Mike Davies
  • Ron Paterson
  • Allister Wilson

There are no affiliations available

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