Question:

Closing Stock is shown on the_____.

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Closing Stock appears on the credit side of the Trading Account to match against the cost of goods sold.

Updated On: Dec 18, 2024

Debit side of trading account
Debit side of Profit & Loss account
Credit side of Profit & Loss account
Credit side of trading account

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The Correct Option is D

Solution and Explanation

Closing Stock is shown on the Credit side of the Trading Account. It represents the unsold goods at the end of an accounting period and is also shown as a current asset in the Balance Sheet.

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Prepare Trading Account, Profit and Loss Account, and Balance Sheet of M/s Sharma and Sons from the following information for the year ending 31^st March, 2023 when closing stock was valued at Rs. 20,000.
Trial Balance as on 31-3-2023

Name of Account	Debit Balance (Rs.)	Credit Balance (Rs.)
Opening Stock	19,400	–
Purchase and Sale	6,50,000	7,80,000
Returns	20,000	20,000
Debtors and Creditors	38,000	87,200
Bills Payable	–	25,200
Machinery	1,00,000	–
Building	2,50,000	–
Bank	10,000	–
Wages	40,000	–
Salaries	40,000	–
Interest	15,000	–
Capital	–	3,60,000
\(Total\)	12,72,400	12,72,400

Closing Stock is shown on the_____.

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The Correct Option is D

Solution and Explanation

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