Originally posted by : George
	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.In some case the closing stock appears as an adjusted purchase account in the trial balance and in this case it does not appear in the trading account but appears only in the balance sheet. The main reason is that we do not pass any entry for consumption. hence we donot prepare any ledger account for it.

 Sir, then tell me why opening stock appears in TB... i agree to the second part that; as companies maintain stock ledger A/c and pass the consumption entries and hence closing stock ll appear... please clarify.

Regards,

Pariksh*t

I am agree with George.

If it is disclosed in trial bal then double entry system of accounting will be violated.

Closing stock is not shown in the trial balance because,

1) Normally trial balance is prepared before the preparation of final accounts. Closing stock gets into picture only at the time of preparing the final accounts (Trading account) Remember the objective of trial balance is just to know whether you have written your debits and credits correctly!.

2) Once closing stock is valued and adjusted with the purchases by writing a journal, closing stock dr to purchases or trading account, (shown in the credit side of the trading account) we do prepare a ledger account for closing stock. Being an asset it will be carried forward to the next year when it becomes the opening stock. It then gets naturally included in the trial balance (a ledger account with a debit balance) if you prepare a TB on that date.

3) Reasons like Giving of double impact or violating the double entry system are also correct. The above is my thought on it.

Regards

Prakash

i am prepare the trailbalance with adjestments in tally erp 9 after complete trailbalance i was saw trailbalance don't display closing stock amount dr and cr side only opening stock amount thats my problem how get the result help me

Hi Akhil Maangal sir 
i prepar the closing stock A/c

                     To Purchases A/c

Don't display trailbalance closing stock sir

Dear All,

I think the Closing Stock = Opening Stock + Purchases - Sales + Profit. That only gives the correct figure of the Closing Stock. Please correct me, if I am wrong. Thanks.

thank u sir

It is incorrect to say closing stock ( stock ) is not shown in Trial Balance. Majorly, in the application tally it is not shown because, closing stock behaves as a derived value than an account ledger in itself. Please consider the following.

Purchases include, 1. Stock 2. Expenses( including service expenses)

Let say company purchased RM, 1000 qty at rs.2/-. It will record as RM Acc Dr Rs. 2000/- to cash/liability.

The above purchase, is transfered to production house let say 500 qty. so , the recording is as follows.

WIP Dr   Rs.1000

To RM Rs.1000

Now your trial balance has Raw material stock, Rs.1000 and WIP Rs.1000.

Say, the work in progress finished for 10 units which consumed, 100 unit of WIP

Finished Good ( name the product company sales) Dr   200

To WIP                                                                    200

In the above case, the stock is not a derived figure but a real time recording which is in Trial Balance recorded as cost price.

So Closing Stock is not an Account but just a Formula? Or it can be Just a Formula.