Question

Y is closing stock taken in credit side of trading account?
And which, opening or closing stock is not shown in trial balance ? and why ?

Answer 1

Dear Student,
In response to your first query.

The following are the items that are recorded in the Trading Account

• Opening Stock, Purchases ( during the year) and other Direct Expenses are recorded on the debit side.
• Sales being the principle revenue generating source and Closing Stock is credited to Trading Account.​

The reason why closing stock appears on the credit side of Trading Account is explained below.

• In order to calculate the gross profit or loss the debit side is matched with the credit side but for this we deduct closing stock ( goods that remain unsold at the end of accounting year) from Cost of good sold (Opening Stock + Purchases + Direct Expenses) to know the value of goods that are actually being sold during the year. Therefore, it is recorded on the credit side of trading account.

In response to your second query
Usually the closing stock does not appear in the Trial Balance as it is valued after the trial balance is prepared.

Hope this answers your query.
Keep Posting!!!