I run an online homewares store. How do I correctly record stock that I keep for myself or give as gifts? Is it simply a write off or do I ‘purchase’ it from myself? The stock I keep for myself I do use for promotional photo shoots/social media advertising, so it would be classed as a business expense anyway.
I’ve been going over this in my head and can’t figure it out! Thanks!
If inventory is reduced without being sold, it needs to be written off.
The key is where do you allocate the write-off value of inventory.
If the inventory was used for business purposes, allocate the inventory write-off to some expense account (e.g. Advertising expenses)
If the inventory was used for personal purposes (e.g. you sell chocolate and you have eaten it), it should be allocated to some equity account such as Owner's equity if you are sole-trader. (if you are a company, then it should be allocated to your loan account)
Thank you so much! That makes perfect sense. Appreciate it 