At what price are stock movements recorded?

Stock movements are recorded at cost price, which is the amount that was originally paid to acquire the inventory. This approach aligns with accounting principles that emphasize the matching of revenue with expenses for accurate financial reporting. The cost price not only represents the amount spent on purchasing the goods but also reflects any related expenses incurred to bring the inventory to its current location and condition.

Using cost price for stock movements helps ensure that the financial statements accurately reflect the company's expenses and profitability over time. It maintains consistency in reporting, which is crucial for assessing performance and making informed decisions regarding inventory management.

Sticking to cost price is also vital when considering how stock might appreciate or depreciate in value; companies generally do not adjust inventory to market values unless there is a significant indication of permanent impairment. Therefore, this method provides a stable basis for evaluating inventory transactions without the volatility that might come from fluctuating market prices or selling prices.