A stocktake (or physical inventory count) is the process of physically counting and valuing all inventory on hand to verify that accounting records match actual stock levels.
A stocktake is the process of counting every item of inventory your business holds and comparing the count to what your records say should be there. Differences between the physical count and recorded amounts (called variances) indicate issues like theft, damage, recording errors, spoilage or supplier delivery discrepancies. Stocktakes can be full (counting everything at once, typically at year-end) or cyclical (counting portions of inventory on a rotating schedule throughout the year). The stocktake process involves: planning and organising count teams, stopping or controlling stock movements during the count, physically counting and recording every item, investigating and resolving variances and adjusting inventory records to match the physical count. The stocktake value directly affects your COGS calculation and therefore your profit. SortBooks ensures that inventory adjustments from stocktakes are correctly recorded in Xero, with appropriate journal entries for write-downs and variances.
SortBooks helps with the bookkeeping behind stocktake by connecting to your Xero account and using AI to suggest the right account for transactions sitting in catch-all accounts, learning from your own past coding. Instead of fixing stocktake by hand, you review each suggestion, approve it, and SortBooks updates Xero, GST code included. Then ask the AI CFO about your numbers, using live Xero data.
Inventory refers to the goods your business holds for sale or uses in production. It is a current asset on the balance sheet and its cost flows to COGS when sold.
COGS represents the direct costs of producing or purchasing the goods your business sells. It includes raw materials, direct labour and manufacturing overhead but not selling or administrative expenses.
Current assets are resources your business expects to convert to cash, sell or consume within 12 months. They include cash, accounts receivable, inventory and prepaid expenses.
Internal controls are processes and procedures designed to safeguard business assets, ensure accurate financial reporting and prevent fraud or errors.
A write-off is the removal of an asset's remaining value from the books, recording it as an expense. Common write-offs include bad debts, obsolete inventory and damaged assets.
Connect Xero, check the AI's suggestions and approve the changes. SortBooks updates Xero for you.