Accounting enteries for inventory stock in trade

Save Share

This query is : Resolved

Quick Summary

This discussion clarifies the accounting entries for stock in trade. Purchases made during the year are initially expensed. To reflect the closing inventory, a journal entry is passed to transfer the stock value from the inventory account to an expense account. This ensures purchases represent the cost of goods sold rather than just stock acquired.

Rahul Jain

Rahul Jain (Querist)

14 October 2023 Whatever the purchase made during the year for stock in trade will be shown as expense. Now to pass the closing balance journal entry for inventory account which account need to be credited.

RAJA P M

RAJA P M (Expert)

14 October 2023 stock in hand - XXXX To, Expense A/c - XXXX (from Expenses (which is already accounted) to transfer Stock Item)

Rahul Jain

Rahul Jain (Querist)

14 October 2023 If this entry will be passed then it will not represent purchase made during the year but rather cost of stock in trade consumed. Moreover the change in inventory of stock in trade(p&l)will also have no significance left.

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now