Article 4 of the Saudi Commercial Books Law
المادة 4 من نظام الدفاتر التجارية
The article explains that the inventory book records the details of goods held at the end of the financial year, or a summary of them, and a copy of the annual statement of financial position if not recorded in another book.
Official text (Arabic)
This article has not been amended since the law was issued.
تقيد في دفتر الجرد تفاصيل البضاعة الموجودة لدى التاجر في آخر سنته المالية، أو بيان إجمالي عنها إذا كانت تفاصيلها واردة بدفاتر أو قوائم مستقلة، وفي هذه الحالة تعتبر هذه الدفاتر أو القوائم جزءا متمما للدفتر المذكور، كما تقيد بدفتر الجرد صورة من قائمة المركز المالي للتاجر في كل سنة إذا لم تقيد في دفتر آخر.
This is the official Arabic wording, the only legally binding version. We do not translate the law itself; the explanation below is ours. Official source: Bureau of Experts at the Council of Ministers
Article 4 explained in plain English
This article deals with the inventory book, the second of the books that Article 1 requires as a minimum, and explains what is written in it.
First: goods held at the end of the financial year
- As a rule, the inventory book records the details of the goods the merchant holds at the end of their financial year.
- Instead of the details, a summary statement of them may be entered, provided that their details appear in separate books or lists.
- In that case, those separate books or lists are treated as a supplementary part of the inventory book, meaning they take its status and are treated as part of it.
Second: the statement of financial position
A copy of the merchant's statement of financial position for each year is also entered in the inventory book, unless it is recorded in another book.
The practical meaning is that it is not enough for the merchant to record daily operations in the original journal under Article 3; at the end of each financial year they must also record the goods they have left and keep a copy of their financial position, and this achieves the purpose stated in Article 1 of showing the financial position accurately.
It is important to keep the separate lists with the inventory book, because they become part of it. For any question about a specific situation, you can consult an accountant or a lawyer specializing in commercial and company cases.
Practical example
At the end of the financial year, the owner of an auto parts warehouse in Riyadh counted his goods in separate detailed lists. He may write a summary statement of the goods in the inventory book, the detailed lists count as a supplementary part of the book, and he also enters in it a copy of his statement of financial position for that year if he has not recorded it in another book.
Translated from our Arabic explanation with machine assistance. For guidance only; it does not replace advice from a lawyer on your situation.
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Frequently asked questions about Article 4 of the Saudi Commercial Books Law
What is written in the inventory book?
The details of the goods the merchant holds at the end of their financial year, or a summary of them, and a copy of the statement of financial position each year if it is not recorded in another book.
Is a summary statement of the goods enough in the inventory book?
Yes, if their details appear in separate books or lists, and these lists are treated as a supplementary part of the inventory book.
When is the inventory taken under the article?
The article refers to the goods the merchant holds at the end of their financial year.
More articles on Journal, Inventory and Ledger
- Article 1
The article requires every merchant to keep regular commercial books in Arabic that show their financial position, at least the original journal, the inventory book and the general ledger, and exempts a merchant whose capital does not exceed SAR 100,000.
يجب على كل تاجر أن يمسك الدفاتر التجارية التي تستلزمها طبيعة تجارته وأهميتها بطريقة تكفل بيان مركزه المالي بدقة، وبيان ما له من حقوق وما عليه من التزامات متعلقة
- Article 3
The article sets out what is entered in the original journal and how: financial operations day by day and personal withdrawals monthly, with auxiliary journals allowed but treated as original if their totals are not carried over.
تقيد في دفتر اليومية الأصلي جميع العمليات المالية التي يقوم بها التاجر وكذلك مسحوباته الشخصية، ويتم هذا القيد يومًا بيوم بالتفصيل باستثناء المسحوبات الشخصية الت
- Article 5
The article requires financial operations of the same nature to be carried over from the journal to the general ledger so that the result of each account can easily be drawn out separately at any time.
ترحل إلى دفتر الأستاذ العام العمليات المالية ذات الطبيعة الواحدة من دفتر اليومية بحيث يمكن استخلاص نتيجة كل حساب على حدة بسهولة في أي وقت.
The texts are reproduced from the official website of the Bureau of Experts at the Council of Ministers for reference; where they differ, the officially published Arabic text prevails. This content is not legal advice.