Question

When the opening and closing stocks are adjusted through purchases, the trial balance does not show any __________.

• A. Opening stock
• B. Closing stock
• C. Purchases
• D. Stock

Answer 1

Answer: (A)

Opening stock

The closing stock represents the cost of unsold goods lying in the stores at the end of the accounting period. The closing stock of the year becomes the opening stock of the next year and is reflected in the trial balance of the next year. Sometimes, the opening and closing stock are adjusted through purchases account. In this regard, the entry recorded is as follows:

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. Another important point is when the opening and closing stocks are adjusted through purchases, the trial balance does not show any opening stock. Instead, the closing stock appears in the trial balance and so also the adjusted purchases.