1. What is Closing Inventory?

Closing inventory refers to the value of goods available for sale at the end of an accounting period. It's a crucial figure for determining cost of goods sold and gross profit.

2. How Does the Calculator Work?

The calculator uses the closing inventory formula:

Where:

• Opening Inventory — Value of inventory at start of period
• Additions — Value of new inventory purchased/produced
• Disposals — Value of inventory sold, discarded, or written off

Explanation: This formula accounts for all inventory movements during the accounting period to determine ending inventory value.

3. Importance of Closing Inventory Calculation

Details: Accurate closing inventory valuation is essential for financial reporting, tax compliance, and business decision making. It directly affects cost of goods sold and gross profit calculations.

4. Using the Calculator

Tips: Enter opening inventory value, all additions during the period, and all disposals. All values must be in USD and non-negative.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between closing inventory and ending inventory?
A: They are the same concept - the inventory value at the end of an accounting period.

Q2: How often should closing inventory be calculated?
A: Typically at the end of each accounting period (monthly, quarterly, or annually).

Q3: What inventory valuation methods can be used?
A: Common methods include FIFO, LIFO, and weighted average cost.

Q4: Should damaged goods be included in closing inventory?
A: Only if they retain some value; otherwise they should be written off as disposals.

Q5: How does closing inventory affect financial statements?
A: It appears on the balance sheet as a current asset and affects the income statement through cost of goods sold.