Why we show always closing stock in credit?
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Answer / bhushan
As per the matching principal of the accounts only those
expenses which are related to earn the revenue are debited
to the trading & profit and loss account, so that we can
arrive at the accurate profit or loss figure. And as the
purchase of material is debited to the trading account we
need to separte the material cost which does not match to
the revenue during the year hence we put the closing stock
which is not utilised yet to earn the revenue and will be
utilised in the future.Thats why we always put the closing
stock fugure to the credit side of Trading & P&L a/c
| Is This Answer Correct ? | 53 Yes | 5 No |
Answer / sudeep
Closing stock is the balance of our raw material at the at
of the year which have to carry forward to the next year,
so closing stock is asset for the our firm that why we put
the entry goes to trading account
credit side and other effect goes to balance sheet asset
side
| Is This Answer Correct ? | 38 Yes | 17 No |
Answer / muhammad jahangir
"Matching Concept"
(expense compare with revenue)
according to matching concept we put the closing stock on
credit side of trading a/c.
only those
expenses which are related to earn the revenue are debited
to the trading & profit and loss account, so that we can
arrive at accurate profit$loss
purchase of raw material are recorded on debit side we need
to seprte the value of closing stock which does not match to
the revenue during year.
closing stock which is not utilized yet to earn revenue but
we use in future.so,put on credit side.....
| Is This Answer Correct ? | 15 Yes | 3 No |
Answer / ketaki
Closing stock inclues raw material, WIP & finished goods.
In totality it reflects the amount of unrealised sales
during the year. That's why it shows credit side of Trading
A/c & untill it turns in sale it is asset of company so its
second effect goes to current asset as stok in hand.
| Is This Answer Correct ? | 11 Yes | 4 No |
Answer / narayan bhusal
Matching Concept
(expense must be related to revenue)
according to matching concept we put the closing stock on
credit side of trading a/c.
only those
expenses which are related to earn the revenue are debited so that we can arrive at accurate profit/loss &
closing stock which is not utilized yet to earn revenue but
we use in future.so,put on credit side
| Is This Answer Correct ? | 2 Yes | 0 No |
Answer / h.r. sreepada bhagi
The statement that Closing Stock is always shown in Credit
is wrong.
1. In the Trial Balance - Closing Stock is not shown ; Only
Opening Stock appears.
2. In the Balance Sheet - Closing Stock is shown on the
Assets side (Debit)
3. In Trading, Profit & Loss A/c it is shown on the Income
side so as to arrive at the cost of goods sold. In the
vertical form of P&L A/c Cost of Goods (Or Cost of materials
consumed or both) sold is calculated by Adding Opening Stock
to Purchases and subtracting Closing Stock. On the same
principle, it is shown on the right hand side (Income or
Credit side) of the P&L A/c.
| Is This Answer Correct ? | 4 Yes | 9 No |
Answer / ajit
Becuse the one effect of the entry goes to trading account
credit side and other effect goes to balance sheet asset
side.so the basic principal of accountancy is that if one
effect is debit then other effect has to be a credit.
| Is This Answer Correct ? | 8 Yes | 32 No |
Answer / raghu
Opening stock appears at debit side hence Closing stock at
credit side
| Is This Answer Correct ? | 0 Yes | 29 No |
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