Closing stock
This query is : Resolved
18 August 2013
Y closing stock not cuming in trial balance?
19 August 2013
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.
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.
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