Trial balance

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sreenath

sreenath (Querist)
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16 May 2010 Hi all

Why Closing stock Will not Come in Trial Balance

sreenath

sreenath (Querist)
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16 May 2010

Jigar Shah

Jigar Shah (Expert)
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16 May 2010 Because a trial balance is a balance of all ledger account at a given point in time.

It is therefore showed below the trial balance and not in the trial balance.

The main reason is that we do not pass any entry for consumption and hence we don't prepare any ledger account for it.

Remember it's a year end adjustment and we don't prepared a ledger for it

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Rahul Gupta

Rahul Gupta (Expert)
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16 May 2010 Agree with Mr Jigar. Trial balance contains balances of all entries that have been entered in the ledgers and are given Double effect.

However for Closing Stock, always remember to give double effect of it in the financial statements. Closing stock is shown as an asset in the Balance Sheet under the current assets and is shown on the credit side of the P&L in order to compute gross profit.

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CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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17 May 2010 Well explained by both experts.

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