Trial balance
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
24 September 2011
I have one doubt,its simple but some confusion .........
The question is
" Why we are taking opening stock amt for the preparation of Trial balance instead of closing stock?"
I expecting a simple but logic answer from your side....
The question is
" Why we are taking opening stock amt for the preparation of Trial balance instead of closing stock?"
I expecting a simple but logic answer from your side....
24 September 2011
That is because all balances of last year have to be considered in the current year's trial balance after adjusting for the transactions during the year.
No transactions take place in the opening stock ledger. Moreover, opening stock has to be presented separately in the financial statements.
Further, closing stock is not included in the trial balance becuase it is the only item which is presented twice in the financial statements. Once in the credit side (P&L) and once in the debit side (Balance Sheet). So even if you include it in the trial balance it will cancel out.
No transactions take place in the opening stock ledger. Moreover, opening stock has to be presented separately in the financial statements.
Further, closing stock is not included in the trial balance becuase it is the only item which is presented twice in the financial statements. Once in the credit side (P&L) and once in the debit side (Balance Sheet). So even if you include it in the trial balance it will cancel out.
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