Abhay Goyal Started The Discussion:
Dear All,

Trial Balance contains the All Closing Balances of Profit and Loss A/c and Balance Sheet as on date.

However the balance of Closing Stock is not taken in Trial Balance and only Opening Balance exists.

Can you explain the reason for this?

Thanking you in advance

Rgds
Abhay Goyal
Posted 17th November 2010 From India , Mumbai

HI

This depend on manner in which accounting is designed for the Organisation.

In the present case ur discussing in the Trial we have Opeaning Stock & whenever we are purchasing the goods we are booking the same under purchases. However in order to find out profitability we require Cost of Goods Sold which is Opeaning Stock+Purchases-Closing Stock. Thus under this method at the end of the year closing stock is checked & valuated to find out COGS, i.e. Closing Stock is derived figure & that is why in accounting books you have seen closing stock is given in notes.

This closing Stock is thus used at two place One in P&L & one in B/S to ensure double Entry & correct accounting.
Posted 18th November 2010 From Singapore , Singapore
generally clsoing stock is an item of adjustment and lies outside Trial balance.

Still u can choose to bring the effect of closing by showing adjusted purchase or cost of consumption.

whatever be the method be consistent in understanding and disclosure.

N Subramani
startupbizplan.com - Services
Posted 18th November 2010 From India , Bangalore



 
 
 
 







Disclaimer: This network and the advice provided in good faith by our members only facilitates as a direction towards the actions necessary. The advice should be validated by proper consultation with a certified professional. The network or the members providing advice cannot be held liable for any consequences, under any circumstances.

About Us - Advertise - Contact Us - RSS   On Google+  
Privacy Policy | Disclaimer | Terms Of Service
Facebook Page | Follow Us On Twitter | Linkedin Network