We have a cleaning business for which we obviously need a supply of chemicals and solutions etc
Our accountant always asks for a value at cost price for whats remaining.
The question is- how does the figure totalled here affect our accounts? We are a self employed partnership my wife and I.
Does it affect net profit, does it affect income tax?
Many thanks.
Nathan
Replies (3)
Please login or register to join the discussion.
Why not ask the accountant why he/she wants the information?
If they haven't explained it; they should.
And the answer is yes
I agree that these are questions you should put to your accountant, but, ignoring any balance at the previous year end, if you spent £10,000 on cleaning materials and had £1,000 worth left at the end of the year then your cleaning materials consumed in the year was only £9,000.
Arithmetic
I agree that if you don't know why your accountants need information you should ask them not a public forum.
But the arithmetical connection between your stock and your profit, is that the higher your stock is the higher is your profit in the preceding period and the lower it is in the following period. The connection with your income tax is of course that your profit is what you pay tax on.