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Byju's Answer
Standard XII
Accountancy
Preparing Financial Statements of NPO-I
Closing stock...
Question

Closing stock A/c appearing in the trial balance will __________.

A
be credited to Trading A/c only
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B
be credited to Trading A/c and shown on the Assets side as Closing stock
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C
be shown on the Assets side as closing stock
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D
shown on debit side of Trading A/c
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Solution

The correct option is A be shown on the Assets side as closing stock
Stock which is unsold at the end of the year is called as closing stock. Closing stock is normally appears out of trial balance.
If closing stock is appearing in the trial balance, it means the adjustment of closing stock is already done. In such case, closing stock will be shown only in the balance sheet in asset side.

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Q. Which of these a/c is closed by transferring to debit side of Trading a/c?
Q. Journal entry for transfer of closing stock is -
Closing Stock A/c Dr.
To Trading A/c
Q. All except _________ are shown on debit side of trading and profit and loss a/c.
Q. From the following Trial Balance of Mr. Tarun Ghosh, prepare Trading and Profit and Loss A/c for the year ending 31st March, 2017 and a Balance Sheet as at that date:
Dr. Balances (₹) Cr. Balances (₹)
Opening Stock 38,000 Capital 3,00,000
Purchases 12,60,000 Secured Loan 20,000
Wages: Factory
Office
 20,000
1,600		 Sales 15,40,000
Salary 54,000 Sundry Creditors 40,000
Business Premises 2,00,000 Returns Outwards 15,000
Furniture and Fixtures 40,000 Bills Payable 12,000
Packing Machinery 60,000 Bank 33,000
Tools 15,000
Rent 58,400
Loan to Mr. Ram Narain on 1st
November, 2016 @ 12% p.a.
10,000
Sundry Debtors 1,31,500
Cash in Hand 7,400
Drawings 60,000
Bills Receivable 4,100
19,60,000 19,60,000

Adjustments:-
(i) Closing Stock amounted to ₹ 50,000.
(ii) Goods costing ₹ 8,000 were sent to a customer on sale or return basis for ₹ 10,000 on 30th March, 2017 and had been recorded in the books as actual sales.
(iii) Allow 8% interest on Capital and charge ₹ 3,000 as interest on drawings.
(iv) Depreciate: Business premises by 5%; Furniture and Fixtures by 20% and Packing Machinery by 10%. Tools are to be revalued at ₹ 12,000.
(v) 212% for discounts is to be provided on Debtors.
(vi) ₹ 1,500 is to be provided for Bad and Doubtful Debts.
Q.

If 'adjusted purchases' and 'closing stock' are given in the trial balance, will you transfer 'closing stock' to trading account? Give reason.

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