In study material 3 of advanced accounting pg no. 7.18 for calculating unrealised profit they have taken increase in stock i.e. opening less closing, however in other remaining sums the cost element is calculated on closing stock.
Why this is so ??
Kindly help !
Thank you !
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Advanced accounting
Replies (3)
please send chapter name and illustration number.i have old study material.
kindly sent.
kindly sent.
It's illustration no. 5, M/s Alpha having departments X & Y.
Normally opening stock reserve is credited to P&L and closing stock reserve is created by debiting P&L. The net effect is to increase reserve only for increase in Stock without disturbing the stock reserve on opening. Even if you do it separately for opening & closing stock the net effect is same.
However this can't be done when there is decrease in Stock
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