Question

Opening and closing stock are adjusted through purchases account. In that case, the entry recorded is ____________________.

• A. Opening Stock A/c Dr.
  To Purchases A/c
• B. Closing Stock A/c Dr.
  To Purchases A/c
• C. Cost of Goods Sold A/c Dr.
  To Closing stock A/c
• D. Purchases A/c Dr.
  To Closing Stock A/c

Answer 1

The correct option is B Closing Stock A/c Dr.

To Purchases A/c
The correct entry is:
Closing Stock A/c.....Dr.
To Purchases A/c
This entry reduces the amount in the purchases account and is also known as adjusted purchases which is shown on the debit side of the trading and profit and loss account.