MA.4:4.2 - Build the movement account
Recover the opening balances and the events that change them during the period. Match the entities, goods or services, dates and currency to each view. The closing balance of the previous period normally supplies the next opening balance on that same basis. If a policy, boundary or opening amount changed, explain that change before comparing period results.
A sufficient source account can supply aggregate movements. Reconstruct individual events where aggregation hides the disputed term. For an ordinary purchase, production and credit-sale account, begin with these relationships:
| Balance | Movement through the period |
|---|---|
| Inventory | Opening inventory + eligible purchases or production cost − cost consumed or sold = closing inventory |
| Receivables | Opening receivables + recognized credit sales − customer settlements = closing receivables |
| Payables | Opening payables + purchases or resource supply on credit − supplier settlements = closing payables |
Use each account’s actual recognition and valuation rules to fill the terms. Physical production can be the same in two views while the cost admitted to inventory differs. Carry opening inventory on the corresponding view’s basis and apply its rule for identifying the cost released when goods are sold. Purchases, consumption and payment are separate events; equating them would erase the difference being explained.
Extend the movement account when other events occur. A write-down changes inventory without buying or selling units. A customer advance may create a liability before revenue is earned. An equipment purchase, depreciation or financing transaction needs its own balance and flow treatment. Obtain that treatment from the responsible reporting or financial practice. Locate an unexplained residual in the missing event, valuation, period or scope; an invented balancing entry cannot explain it.