Which is the accounting concept that required the practice of crediting closing stock to the trading account?

Going concern

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Cost

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Realization

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Matching

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Solution

The correct option is D Matching
The concept of matching emphasis that expenses incurred in an accounting period should be be matched with revenues during that period. It follows from this that the revenue and expenses incurred to earn these revenue must belong to the same accounting period.

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Similar questions

Q. Opening stock, purchases and direct expenses are credited to trading account.

If 'adjusted purchases' and 'closing stock' are given in the trial balance, will you transfer 'closing stock' to trading account? Give reason.

Q. From the following Trial Balance you are required to prepare trading and profit and loss account for the year ending March 31, 2017 and Balance Sheet on that date.

Particulars	Amount (₹)	Particulars	Amount (₹)
Opening stock	25,000	Sales	7,00,000
Furniture	16,000	Creditors	72,500
Purchases	5,55,300	Bank Overdraft	50,000
Carriage Inwards	4,700	Provision for bad and doubtful debts	2,100
Bad debts	1,800	Discount	500
Wages	52,000	Capital	2,00,000
Debtors	80,000	Purchases Return	20,000
Sales Return	15,000
Rent	24,000
Miscellaneous Expenses	3,400
Salaries	68,000
Cash	8,900
Drawings	14,000
Buildings	1,60,000
Advertising	10,000
Interest on Bank Overdraft	7,000

	10,45,100		10,45,100

Adjustments

1. Closing stock valued at ₹ 36,000.
2. Private purchases amounting to ₹ 5,000 debited to purchases account.
3. Provision for doubtful debts @ 5% on debtors.
4. Sign board costing ₹ 4,000 includes in advertising.
5. Depreciate furniture by 10%.

Practical Problem

From the following Trial Balance of M/s Sanjay and Vijay, you are required to prepare Trading and Profit and Loss Account for the year ended 31st March, 2013 and Balance Sheet as on that date after taking into consideration the adjustments given below.

Trial Balance as on 31^st March, 2013
Debit Balance	Amount Rs	Credit Balance		Amount Rs
Salaries and wages	12,000	Sales		1,10,000
Postage and Telegram	1,750	Sundry Creditors		72,700
Opening Stock	23,500	Bills Payable		40,000
Plant and Machinery	70,000	10% Bank loan (Taken on 1^st Oct. 2012)		60,000
Advertisement	5,000	Outstanding Audit fees		5,900
Import duty	2,100	Capital A/c-	Sanjay	45,000
Bad debts	1,000		Vijay	45,000
Purchases	98,500
Sundry Debtors	45,800
Bills Receivable	16,700
Carriage outward	1,800
Wages and stationery* (Note 2)	14,000
Printing and stationery	4,600
Cash in hand	1,850
Leasehold Premises	80,000
	3,78,600			3,78,600

Adjustments:
1) Closing stock was valued at Rs 30,000.

2) Postage stamps of Rs 250 and stationery of Rs 400 are unused.

3) Goods of Rs 2,500 distributed as free samples.

4) Leasehold property is to be run for 10 years w.e.f. 1st October, 2012.

5) Depreciate Plant and Machinery at 10% p.a.

6) Mr. Rajan, our customer become insolvent and could not pay his debts of Rs 1,500.

Q. Consider the following statements.
A credit purchase during the accounting year which was not recorded in the books of account but included in the closing stock is to be.
I. Added to the credit purchases account
II. Added to the creditors account
III. Subtracted from the closing stock
IV. Added to the opening stock
Which of the statements given is/are correct?

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Which is the accounting concept that required the practice of crediting closing stock to the trading account?

The correct option is D MatchingThe concept of matching emphasis that expenses incurred in an accounting period should be be matched with revenues during that period. It follows from this that the revenue and expenses incurred to earn these revenue must belong to the same accounting period.

The correct option is D Matching
The concept of matching emphasis that expenses incurred in an accounting period should be be matched with revenues during that period. It follows from this that the revenue and expenses incurred to earn these revenue must belong to the same accounting period.