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Question

When closing stock is given in trial balance, then it will effect ___________.


A
Trading account only
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B
Balance sheet only
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C
Owner's equity only
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D
Both Trading account and Balance sheet
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Solution

The correct option is C Balance sheet only
Closing stock usually doesn't appear in the trial balance, if it does it will appear only in balance sheet on the assets side and not in the trading account. It is the stock left in business at the end of the year. It is basically the inventory the company has in hands at the end of the year or is unsold. It includes work-in-progress, raw materials, finished goods, etc. 

Accountancy

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