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Question

If closing stock does appears in the trial balance and also given as additional information, it should be ___________.


  1. Credited to the profit and loss account

  2. Deducted from the purchases in the trading account

  3. Shown on the asset side of the Balance sheet

  4. Credited to the trading account


Solution

The correct option is C

Shown on the asset side of the Balance sheet


If closing stock does appears in the trial balance, it means the purchases has been reduced to the extent of stock amount at the end of the period. So, it should be shown in the Balance sheet under current assets and it should not be credited to Trading account.

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