Question

42).stock reserve in relation to opening stock appears............
a) on the debit side of branch account
b)on the credit side of branch account
c)on the debit side of trading account
d)on the credit side of trading account

Answer 1

Answer:

B

Explanation:

on the credit of branch account

Answer 2

Answer:

c) On the debit side of the trading account.

Explanation:

• A Stock reserve account (inventory reserve) is a contra asset account on a company's balance sheet made in anticipation of inventory that will not be able to be sold.
• Every year, a company has an inventory that they are unable to sell for various reasons. It might be because it is spoiled, has fallen out of fashion, or become technologically obsolete.

• The opening stock appears on the debit side of the trading account.
• And hence to reduce its cost, the stock reserve is transferred to the credit side.
• As the closing stock is on the credit side of the trading account and above cost, we reduce the profit element by debiting the General P&L A/c.

Therefore,

Stock reserve in relation to opening stock appears on the debit side of the trading account.