INTERVIEW QUESTIONS ACCOUNTING PROCESS TRIAL BALANCE DETAILS

Question: The trial balance of M/S RAM & Co. shows closing stock of Rs. 30,000. It will be recorded in: a) Trading Account b) Profit and Loss Account c) Balance Sheet d) Both (a) and (c)

Answer: (c) Balance Sheet
Description: If closing stock is appearing in side the trial balance it means that it has already been subjected to double entry i.e. it is adjusted with purchases and cost of goods sold must be appearing in the trial balance.
Cost of Goods Sold= Opening Stock+ Purchases- Closing Stock.
In such a case, the closing stock will be placed only in the Balance Sheet on Asset side and cost of goods sold will be debited to Trading Account.

(c) Balance Sheet
Description: If closing stock is appearing in side the trial balance it means that it has already been subjected to double entry i.e. it is adjusted with purchases and cost of goods sold must be appearing in the trial balance.
Cost of Goods Sold= Opening Stock+ Purchases- Closing Stock.
In such a case, the closing stock will be placed only in the Balance Sheet on Asset side and cost of goods sold will be debited to Trading Account. Source: CoolInterview.com

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