close x


y closing stock not come in trial balance


why closing stock balance doesnt come in trial balance?

whats the correct reasoning?  it gets set off or it is prepared afterwards. whats the correct one answer to it..

 
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articled assistant


hi


Trail balance includes opening stock , purchases and sales figures.

 

closing stock (in units) = opeing stock +purchases-sales.

 

closing stock is also shown in trail balance by way above indirect route.


Total thanks : 1 times

 
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The reason why closing stock is not taken into account in a 
trial balance is because a trial balance is a balance of 
all ledger account a given point in time.It records only 
transactions which have a two way effect for EG:Purchases 
where goods are bought against cash or credit and sales 
where goods are sold against cash or credit..But closing 
stock is not a transaction having a two way effect any 
given point in time.It is only an indication of the goods 
lying in the factory at the end of the year.It is therefore 
showed below the trial balance and not in the trial 
balance.However in order to derive at the exact gross 
profit the closing stock is taken into consideration in the 
trading account and also appears as an asset in the 
balancesheet.
 
closing stock = opening stock + purchase – sales
 
This is because it is a post trial balance adjustment
effected after the trial balance has been adjusted. the
adjustment entry is as follows
 
DR Stock
CR Income Statement
 
The debit balance for stock is what appears in the balance
sheet.
The credit balance to the income statement is effectively a
deduction from cost of sales, since unsold stock is not part
of cost of sales for the period
 
 
Closing stock does not come in the trail balance beacuse the stock in hand 
is already included in the purchases. If you want to include the closing stock 
in the TB then you need to deduct the cost from the Purchases


Total thanks : 2 times

 
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FCA, Future CA


Closing Stock will come in the TB under Current Assets.  

 
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