Closing Stock

Closing stock refers to the goods remaining unsold during the year.
They are valued at Cost price or Market Price whichever is lower.

Closing entries

Closing Stock Account Dr.
 Trading Account 
(For closing Stock transferred to trading account) 

Treatment in Final Accounts

When closing stock is given outside the Trial Balance

It will appear on

  • The credit side of the Trading Account
  • Under Current Assets in the Balance Sheet.

When closing stock appears inside the Trail Balance

This means that the Closing stocks have already been deducted from the Purchases and thus it will ONLY appear in the Balance Sheet under Current Assets.