Question

Closing stock appearing in the Trial Balance is shown on the:

• A. Credit side of Profit & Loss A/c
• B. Credit side of Trading A/c
• C. Assets side of the Balance Sheet
• D. None of these

Hint:

Remember: If closing stock is given in the Trial Balance, show it only in the Balance Sheet. If it is outside the Trial Balance, show it in both Trading A/c (credit side) and Balance Sheet (assets side).

Answer 1

The Correct Option is C

Step 1: Understanding Closing Stock.
Closing stock is the value of unsold goods at the end of an accounting period. If it is given in the Trial Balance, it means it has already been adjusted.
Step 2: Position in Financial Statements.
When closing stock is given in the Trial Balance, it is shown only in the Balance Sheet under Assets. It is not shown in the Trading Account again (to avoid double entry).
Step 3: Analyzing the Options.
(A) Credit side of Profit & Loss A/c – Incorrect.
(B) Credit side of Trading A/c – Incorrect, already adjusted.
(C) Assets side of the Balance Sheet – Correct, since stock is an asset.
(D) None of these – Incorrect.
Step 4: Conclusion.
Thus, closing stock (when in Trial Balance) is shown on the Assets side of the Balance Sheet.