🧭 Stock count: from physical count to correct stock value

Intermediate · 10 min · Inventory

Count your stock (a small cycle count or a full physical count), correct the differences with stock adjustments, and check the stock value report.

Why and when you use it

Stock in the system and stock on the shelf drift apart over time through damage, theft, wrong billing and missed entries. Regular counting catches problems early, keeps your stock value and profit honest, and gives your CA reliable closing stock for the year. Store keepers count; the owner or accountant approves the adjustments.

Before you start

All purchase bills, invoices and returns up to the count date are entered
Pick a time when no goods are moving, or count one area at a time

Step by step

Plan the countDecide what to count. A cycle count covers a few products or racks at a time; use Cycle Counts in Warehouse if you use that module. A full physical count covers everything, usually at year end.
Count and recordCount the actual quantity of each product and note it against the system quantity from Inventory (the Stock column).
Investigate differencesFor each difference, open Stock movements in Inventory. Often a bill was not entered or a return was missed; enter that document instead of adjusting.
Make stock adjustmentsFor real differences, use Stock Adjustment in Inventory: Stock In (increase) for extra found, Stock Out (decrease) for shortages, Damage / Spoilage for broken or expired goods. Write the reason and press Apply Adjustment.
Check serials if trackedFor serial-tracked products, run Match with stock in Serial Numbers.
Run the stock value reportOpen Reports, choose Stock Valuation, pick the period and press Run Report. Print or Export PDF for your records and your CA.

Worked example

On 30 Nov 2026 Sharma Traders does a cycle count of the tea rack at the Sanganer godown. The system shows 478 packets of Masala Tea 250 g; the count finds 466, of which 6 are water-damaged.

Warehouse, Cycle Counts: count the tea rack and record 466 packets.
Inventory, Stock movements: every purchase, sale and return of the tea is checked; no missing bill or invoice is found.
Stock Adjustment: Stock Out (decrease) 6 packets, reason "Short on cycle count 30 Nov 2026", Apply Adjustment.
Stock Adjustment: Damage / Spoilage 6 packets, reason "Water damage, rack A4", Apply Adjustment.
Reports: Stock Valuation, Run Report, Export PDF.

Result: System stock is now 466 packets, matching the shelf. At the ₹92 purchase price, 12 packets worth ₹1,104 are written off, and the Stock Valuation report shows the corrected stock value.

💡 Tips

Count fast-moving and costly products every month and the rest every quarter.
Have someone other than the store keeper do surprise counts sometimes.
Keep the count sheets in Documents as proof for your CA.

⚠️ Common mistakes

Adjusting stock before checking for missing bills or invoices, which hides the real error.
Using Stock In to add goods bought from a supplier. Enter the purchase bill instead.

Questions

Does a stock adjustment affect GST?

Goods lost, stolen or destroyed can affect input tax credit already taken. Check with your CA how to handle it.

🎬 Video walkthrough (script — recording coming soon)

Scene 1: Why system stock and shelf stock drift apart.
Scene 2: Count a rack in Cycle Counts.
Scene 3: Check Stock movements for missing documents.
Scene 4: Apply Stock Out and Damage / Spoilage adjustments with reasons.
Scene 5: Run the Stock Valuation report and Export PDF.