Question

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Q. WHY CLOSING STOCK IS CREDITED IN TRADING ACCOUNT ????​

Answer 1

Answer:

Cost of sales must be matched up with current year’s revenue and as the inventory at the end of the period has not been sold and thus should not be accounted against sales revenue, therefore it must be deducted from cost of sales. That is the conceptual reason why we deduct closing stock from the total of opening inventory and purchases.

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Answer 2

Answer:

HERE IS YOUR ANSWER!!

According to matching concept , all the expenses should be charged against the revenue generated during the accounting period .

Closing stock is the unsold stock remained at the end of the year that means we cannot generate any revenue from it in that period

Following the matching concept , We cannot charge it against the sales revenue generated in that period .and thus we deduct it from the cost of good purchased by showing it in the credit side .

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