Where will you include closing stock in trail balance?

The reason why closing stock is not taken into account in a trial balance is because a trial balance is a balance of all ledger account a given point in time.It records only transactions which have a two way effect for EG:Purchases where goods are bought against cash or credit and sales where goods are sold against cash or credit..But closing stock is not a transaction having a two way effect any given point in time.It is only an indication of the goods lying in the factory at the end of the year.It is therefore showed below the trial balance and not in the trial balance.However in order to derive at the exact gross profit the closing stock is taken into consideration in the trading account and also appears as an asset in the balancesheet.In some case the closing stock appears as an adjusted purchase account in the trial balance and in this case it does not appear in the trading account but appears only in the balance sheet.

Every stuff which has a ledger only will be included in TB and especially the ledger balances will be carried forward to TB at the end of the period

In trial balance closing stock is not taken.
Trial balance is total of all accounts at the end of the period.
so the Closing stock is taken only the adjusting entry.

If consumption is recorded in trial balance in place of purchases and opening stock, then closing stock need to be in debits.
Disclaimer! Only experienced professionals will understand the depth and reason.

Closing Stock does not appear in the Trial Balance it includes in the adjustments.

 

It’s depend upon type of business.

 

Example1: Trading Company

 

We are debiting Purchase A/c and Crediting AP/Cash A/c and there is no ledger creating for closing stock So there is no closing stock can show in unadjusted TB.

While adjusting TB you can ADD value as Dr & Cr for closing stock value, which Cr will consider in P/L and Dr in B/S.

 

Example2: Contracting Company

 

Here inventory is debiting instead of Purchase A/c, where the material is using as raw material. So, this will appear in TB. Because there is a ledger Account creating as Inventory.

 

Hope this example will give a solution for this argument.

 

Purchaes or ending inventory appars in trial balance at its net value. All the balance writtein on trial balance have their net or closing balance. SO closing stock will be included on trial balance. I can prove it by taking an exmaple under perpetual method.

INventory account Debit 2,000

                      A/P         2,000

then in the middle of year we sold  costing 1,000 on 1,500

So we pass sale entry and pass cost of good sold entry just to understand the occuring.

cash    1,500

   Sales        1,500

Cost of good sold 1,000

    Inventory               1,000

Trial balance

                     Debit    Credit 

Inventory        1,000

Cash                1,500

CGS                1,000

Sales                             1,500

A/P                                2,000

Total               3,500        3,500

Please follow the above example to understand the closing stock is show on trial balance or not. SO it mean it is included as per stated example as all account are recorded on their net value.

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The Closing Stock and the end of an accounting period and the Opening Stock at the beginning of the subsequent accounting period represent the same account

Closing Stock is not included in Trial Balance that is at no side (neither Debit nor Credit).
It is always written below the Trial Balance.

closing stock will include in the debit side of trial balance is an asset of the company