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Inventory stock (สต๊อกสินค้า, which is the term in Thai) are common terms used in accounting, although they are used interchangeably, they have different. The difference is somewhat subtle; however, it’s vital to your small business. To be able to give accurate accounting in a business, the difference between the two terms must be understood and used accurately.

Inventory

Inventory deals with a small business’s finished products, alongside the raw materials used for their production, the building in which the products are produced, and the machinery used for the production. Generally, anything that goes into the production of the items you sell in your business forms its inventory.

Stock

The finished product that you sell in your business is called stock. In some cases, raw materials also make up stock if those products are also sold in the business. For example, a computer dealership’s stock includes computers but also can consist of keyboards, mouse, computer screen, or other computer accessories.

While stock includes products that are sold in the daily operation of the business, inventory, on the other hand, deals with sale products as well as the goods and materials used for their production. For example, the computer and computer accessories are sold during regular business practices, but this sale does not include the machines that operate diagnostic tests on the computer itself. Inventory includes the entire assets put into a business for the production of the goods it sells and determines the price at which the stock is sold. The stock is directly proportional to the business revenue; more sales on stock generate higher revenue.

Considerations

For accounting, inventory items are counted generally once a year, whereas, for stock, counting is done daily. This is because it is essential to replenish inventory to ensure that stock does not dry up for the business to keep running.

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