Calculation of Consumption of Consumables (E.g., Stationary, Medicines) and Stock adjustments (Including problems)
by In non profit organisations, items like stationery, medicines, sports materials, and other consumables are treated as revenue expenses. Since purchases may not equal actual usage during the year, the amount consumed is calculated by adjusting opening and closing stock.
Formula for Consumption of Consumables
Consumption = Opening Stock + Purchases − Closing Stock
If outstanding or prepaid items are given:
Consumption = Opening Stock + Purchases + Outstanding Expenses − Closing Stock − Prepaid Expenses
Journal Entries for Consumables:
| Transaction | Journal Entry |
|---|---|
| Purchase of Consumables | Consumables A/c Dr. To Cash/Bank/Creditors A/c |
| Transfer of Consumables Used | Income and Expenditure A/c Dr. To Consumables A/c |
| Closing Stock of Consumables | Consumables Stock A/c Dr. To Consumables A/c |
Example 1: Stationery Consumption
Given:
Opening Stock of Stationery = ₹5,000
Purchases during the year = ₹20,000
Closing Stock of Stationery = ₹7,000
Calculation:
Consumption = Opening Stock + Purchases − Closing Stock
= ₹5,000 + ₹20,000 − ₹7,000 = ₹18,000
Stationery Expense = ₹18,000
Treatment:
Income and Expenditure Account:
| Particulars | Amount |
|---|---|
| Stationery Consumed | ₹18,000 |
Balance Sheet:
| Asset | Amount |
|---|---|
| Closing Stock of Stationery | ₹7,000 |
Example 2: Medicines Consumption
Given:
Opening Stock of Medicines = ₹15,000
Purchases = ₹80,000
Closing Stock = ₹10,000
Consumption = ₹15,000 + ₹80,000 − ₹10,000 = ₹85,000
Medicines Consumed = ₹85,000
Stock Adjustment Entry
When closing stock is given separately:
| Adjustment | Journal Entry |
|---|---|
| Closing Stock of Consumables | Stock A/c Dr. To Income and Expenditure A/c |
Treatment in Final Accounts
| Item | Treatment |
|---|---|
| Opening Stock | Added to consumption |
| Purchases | Added to consumption |
| Closing Stock | Deducted from consumption |
| Consumption | Shown as Expense in Income and Expenditure Account |
| Closing Stock | Shown as Asset in Balance Sheet |
Proper calculation of consumables ensures that only the actual amount used during the year is charged as expense and the unused stock is carried forward.