Explain the effect of closing stock on gross profit and net profit. comment on

Explain the effect of closing stock on gross profit and net profit.
comment on the financial health of their business.

Question Posted / mim

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Explain the effect of closing stock on gross profit and net profit. comment on the financial health..

When we purcahe then the Cloing stock against this purchase
increased so due to this its not effect on G/P as Per N/P
after issued and consumed this item Closing stock will be
decrease then G/P and N/Palso Decrease.

Is This Answer Correct ?

9 Yes

2 No

Explain the effect of closing stock on gross profit and net profit. comment on the financial health..

Answer / rao

with out closing stock how we start business, becoz it's
assest and it shoul be in cr side of trading a/c,and if we
wouldnot take in trading a/c then gross profit is not
correct, and when we take g.p in cr side of p/l a/c the net
profit also not correct and net profit would differ in
balancesheet. So inthis way it effects in g.p and n.p.

Is This Answer Correct ?

8 Yes

4 No

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