Question

Explain the treatment of 'Closing Stock' in the final accounts, in given cases:

(a) It is given as an adjustment.
(b) It appears in the Trial Balance​

Answer 1

Answer:

Value of unsold goods at the end of an accounting period is termed as Closing Stock. The valuation of closing stock is computed on the basis of its cost price or the realisable value, whichever is less.

Treatment of Closing Stock Closing stock will be treated as per the situation. Sometimes it is given in the trial balance itself and some time it is given as an adjustment at the end of the trial balance. The treatment will be different in both the cases.

When Closing Stock is Given in the Trial Balance When closing stock is given in the trial balance only single posting will be there in the balance sheet as assets.

When Closing Stock is Given in the Adjustment When closing stock is given in the adjustment, then there will be two postings. First of all the amount of closing stock will be shown in the credit side of Trading Account and that the same figure of closing stock will be shown in the assets side of balance sheet.

Answer 2

Answer:

Explanation:

QUESTION:-

the treatment of 'Closing Stock' in the final accounts

FIND:-

(a) It is given as an adjustment.

(b) It appears in the Trial Balance​

SOLUTION:-

CASE 01

It is given as an adjustment.

• SHOWN ON THE CREDIT SIDE OF TRADING ACCOUNT
• SHOWN ASSET SIDE OF BALANCE SHEET

CASE 02

It appears in the Trial Balance​

• ONLY SHOWN ON THE ASSET SIDE OF BALANCE SHEET

NOTE

CASE 01

• IF AN ITEM APPEAR IN TRIAL BALANCE , IT WILL BE SHOWN ONLY IN 'ONE' FINANCIAL STATEMENT

CASE 02

• IF ANY THING RELATING TO AN ITEM APPEARING IN ADJUSTMENT IT WILL BE SHOWN ON 'TWO' FINANCIAL STATEMENTS
• (EITHER TRADING OR PROFIT AND LOSS ACCOUNT AND BALANCE SHEET)