Inventory

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Raghav (Querist)

23 March 2011 Dear Sir,

We are doing sale and purchase of goods,I need to know at the time of closing of balance sheet why and when do we show the following:

1) Closing stock : credit of Trading account
2) Closing stock : credit of Trading account and assets side of balance sheet.

Kindly suggest me the same because in US accounting I have seen that Inventory is being shown in assets group whether we purchase or sale the goods.

Ram Avtar Singh

Ram Avtar Singh (Expert)

23 March 2011 Closing stock is the balance of our raw material at the at of the year which have to carry forward to the next year.

so closing stock is asset for the our firm/company.we put the entry in trading account credit side and other effect goes to balance sheet asset side

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Raghav

Raghav (Querist)

23 March 2011 Dear Sir,

Thanks to you.

But I need to know in US accounting why do they show stock in assets at the time of sale and purchase?

I mean there is only one group of Inventory in assets and when they purchase they Dr the inventory and when they sale they Cr the inventory and other part is doing through accounts payable and receivable account.

Please suggest me the same.

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