What is meant by closing stock? Show its treatment in final accounts.
What is meant by closing stock? Show its treatment in final accounts.
Value of unsold goods at the end of an accounting period is termed as Closing Stock. The valuation of the closing stock is computed on the basis of its cost price or the realisable value, whichever is less.
Treatment of Closing Stock - Closing stock will be treated as per the situation. Sometimes it is given in the trial balance itself and some time it is given as an adjustment at the end of the trial balance. The treatment will be different in both the cases.
When Closing Stock is given in the Trial Balance - When closing stock is given in the trial balance only single posting will be there in the balance sheet as assets.
When Closing Stock is given in the Adjustment - When closing stock is given in the adjustment, then there will be two postings. First of all, the amount of closing stock will be shown in the credit side of Trading Account and that the same figure of closing stock will be shown in the assets side of the balance sheet.
Value of unsold goods at the end of an accounting period is termed as Closing Stock. The valuation of the closing stock is computed on the basis of its cost price or the realisable value, whichever is less.
Treatment of Closing Stock - Closing stock will be treated as per the situation. Sometimes it is given in the trial balance itself and some time it is given as an adjustment at the end of the trial balance. The treatment will be different in both the cases.
When Closing Stock is given in the Trial Balance - When closing stock is given in the trial balance only single posting will be there in the balance sheet as assets.
When Closing Stock is given in the Adjustment - When closing stock is given in the adjustment, then there will be two postings. First of all, the amount of closing stock will be shown in the credit side of Trading Account and that the same figure of closing stock will be shown in the assets side of the balance sheet.
