CMA Foundation · Fundamentals of Financial and Cost Accounting · Trial Balance
In the trial balance of Iyer & Sons, closing stock of ₹60,000 is given as an adjustment outside the trial balance. How should it be treated when drawing up the trial balance?
Closing stock given as an adjustment is not shown in the trial balance. It has not yet been recorded in the ledger, so it appears only in the trading account on the credit side and in the balance sheet as a current asset.
- AShown on the debit side of the trial balance
- BShown on the credit side of the trial balance
- CNot shown in the trial balance; it appears in the trading account and balance sheetCorrect
- DShown on both sides of the trial balance
Explanation
Closing stock is determined at the period end and is not recorded in the ledger before the trial balance. It is shown only in the trading account (credit side) and the balance sheet (asset). Opening stock, by contrast, appears as a debit in the trial balance.
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