Closing stock in the Trial Balance implies that______________?
Correct answer: D. It is adjusted in the Purchase A/c
- A. It is already adjusted in the opening stock
- B. It is adjusted in the Profit &Loss A/c
- C. It is adjusted in the Cost of Sale A/c
- D. It is adjusted in the Purchase A/c
Explanation
When closing stock is included in the trial balance, it has already been adjusted through the Purchases Account, usually by crediting purchases and recording closing inventory separately. It is therefore not treated as an additional adjustment in the Trading Account.
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Accounting principles explain the rules used to record, classify and report business transactions. Coverage includes the accounting equation, double-entry system, accrual and cash bases, matching and prudence concepts, consistency, going concern, business entity, and the difference between capital and revenue items.
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