closing stock in trial balance
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
11 January 2011
can anyone tell me what are possible situation when cl.stock appear in trial balance?
11 January 2011
When Closing stock less from purchase then by Journal entry then closing stock will appear in trial. but its not way of accounting.
11 January 2011
If closing stock appeared in Trial balance it means the purchases has been reduced to the extent of stock amount at the end of the period. The accounting treatment will be closing stock to be shown in Balance sheet under current assets and it should not be credited to Trading, Profit & Loss a/c.
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15 March 2011
Its the situation normally in ERPs as ERP's book the actual consumption entry rather than the traditional - opening stock + purchases less closing stock journal...
The flow in such cases is:
On purchases the entry is Stock a/c Dr to Creditors account and the expense / consumption entry is passed on the actual production been booked in the ERP...
The flow in such cases is:
On purchases the entry is Stock a/c Dr to Creditors account and the expense / consumption entry is passed on the actual production been booked in the ERP...
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05 June 2011
CA Gangadhar Mishra is right
04 January 2014
closing stock in trial balance 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.
Regards,
CA Ayush Agrawal
Regards,
CA Ayush Agrawal
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