How-to guides
Stock-Taking Guide: How to Count Your Shop's Stock and Fix the Differences
Stock on the shelf is usually a shop's biggest asset, and the number in the system is only as good as the last count. A physical count at year end is needed for the accounts; smaller counts through the year catch problems while they are still small. This guide covers both.
Key takeaways
- Count all stock at least once a year, on the last day of the financial year or as close to it as possible.
- Cycle-count fast movers and high-value items weekly or monthly.
- Value the count at the lower of cost and net realisable value; damaged and expired goods are written down.
- Input credit on goods lost, stolen, destroyed or written off must be reversed under GST.
Rules that apply
| Rule | What it means |
|---|---|
| Stock records under GST | A registered business must keep accounts of goods received and supplied and of stock, at its principal place of business |
| Credit on lost or destroyed goods | Input credit is not available on goods lost, stolen, destroyed, written off or given away free; reverse any credit already taken |
| Valuation for the accounts | Closing stock is valued at the lower of cost and net realisable value (ICAI AS 2) |
| Keeping the records | GST requires accounts to be kept until 72 months after the due date of the annual return for the year |
Checked on 11 November 2026 against the CGST Act, 2017 (sections 17(5)(h), 35 and 36), CGST Rules rule 56 and ICAI AS 2.
Before the count
- 1Fix the date and time: ideally after closing on 31 March, or on a quiet day near it.
- 2Finish recording all purchases, sales and returns up to that moment.
- 3Tidy the shelves so each item is in one place, and separate damaged and expired goods.
- 4Print count sheets by rack or area, listing items without the system quantity, so counters count rather than confirm.
- 5Assign pairs: one counts, one writes. Cover every rack, store room and display.
During and after the count
- Count in the unit you sell: pieces, packets or kilos, not boxes, unless every box is sealed and full
- Do not sell or receive goods in an area while it is being counted
- Enter the counts and compare with the system, item by item
- Recount the biggest differences by value before accepting them
- Investigate patterns: the same items short every time, or one area always off
- Record adjustments with a reason: damage, expiry, theft, counting error in earlier records
Worked example
Sri Lakshmi Stores, the kirana in our accounting examples, counted on 31 March 2026. The system showed stock worth ₹3,36,800 at cost; the count came to ₹3,30,000. Of the ₹6,800 difference, ₹2,900 was expired biscuits and snacks written off, ₹1,700 damaged oil and rice, and ₹2,200 could not be explained. The closing stock in the accounts is the counted ₹3,30,000. Input credit on the written-off goods is reversed.
Unexplained loss of ₹2,200 on ₹48 lakh of sales is small, but the owner now cycle-counts the 50 highest-value items every Monday to see whether it is concentrated anywhere.
Cycle counting through the year
Instead of counting everything monthly, count a different slice each week: the fastest movers, the most expensive items, and items with past differences. Over a quarter every important item is counted at least once, and problems show up within weeks instead of at year end.
The numbers to watch
| Number | How to work it out | Why it matters |
|---|---|---|
| Shrinkage % | Unexplained loss ÷ sales × 100 | Theft, billing errors and wastage show here |
| Write-offs for expiry and damage | Value written off per month | Points to over-buying or poor storage |
| Count accuracy | Items with no difference ÷ items counted | Measures how reliable the system stock is |
| Dead stock | Items not sold in 180 days, at cost | Candidates for discounting or returning |
Where TripleBill fits
TripleBill keeps stock per item from every sale, purchase and return, records stock adjustments with a reason, and shows stock value at quantity × each item's current purchase price. On Pro, racks and shelves give each item a location, with a printable stock-take sheet by rack and a stock-by-rack report. For audited accounts, your accountant values the counted stock under AS 2.
Frequently asked questions
How often should a shop count stock?
A full count at least once a year at year end, and cycle counts of important items every week or month.
What date should the year-end count be?
31 March, the end of the financial year, or as close as possible with the movements in between adjusted.
How should I value the counted stock?
At the lower of cost and net realisable value; damaged and expired goods at what they can actually be sold for.
Do I have to reverse GST credit on expired goods?
Yes. Input credit is not available on goods destroyed or written off; reverse any credit already claimed on them.
What is cycle counting?
Counting a portion of the stock on a rotating schedule, so every important item is counted regularly without closing the shop.
What if the count is far from the system?
Recount the largest differences, check for unrecorded purchases, returns and transfers, and only then adjust with reasons.
About the author
Written by the TripleBill team, the people who build the billing and accounting software this site is about. We check competitor prices on their own websites on the date shown above, and we say so when our product is the weaker choice. This article is general information, not tax advice.
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Related pages
Stock that matches the shelf.
Live stock from every bill, adjustments with reasons, and rack-wise stock-take sheets on Pro.