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Question
Closing stock appears in the Final Accounts in the ______.
Options
Trading account only
Profit and Loss account and Balance Sheet
Balance Sheet only
Trading account and Balance Sheet
Solution
Closing stock appears in the Final Accounts in the Trading account and Balance Sheet.
Explanation:
The trade account calculates the cost of products sold, whereas the balance sheet presents it as a current asset, representing the value of unsold stock at the conclusion of the accounting period.
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RELATED QUESTIONS
From the following details for the year ended 31st March 2018, prepare a trading account
| Particulars | ₹ | Particulars | ₹ |
| Opening stock | 2,500 | Returns inwards | 7,000 |
| Purchases | 27,000 | Coal and gas | 3,300 |
| Sales | 40,000 | Carriage inwards | 2,600 |
| Wages | 2,500 | Closing stock | 5,200 |
| Returns outwards | 5,200 |
Compute the cost of goods sold from the following information:
| Particulars | ₹ | Particulars | ₹ |
| Opening stock | 10,000 | Indirect expenses | 5,000 |
| Purchases | 80,000 | Closing stock | 15,000 |
| Direct expenses | 7,000 |
From the following balances obtained from the books of Mr. Ganesh, prepare trading and profit and loss account.
| Particulars | ₹ | Particulars | ₹ |
| Stock on 01.01.2017 | 8,000 | Bad debts | 1,200 |
| Purchases for the year | 22,000 | Trade expenses | 1,200 |
| Sales for the year | 42,000 | Discount allowed | 600 |
| Expenses on purchases | 2,500 | Commission allowed | 1,100 |
| Financial charges paid | 3,500 | Selling expenses | 600 |
| Expenses on sale | 1,000 | Repairs on office vehicles | 600 |
Closing stock on December 31.12.2017 was ₹ 4,500
Distinguish between book keeping and accounting.
Mr. Sputnik, who is always in a hurry, prepares the following trial balance as at 31.12.2019. You are required to prepare the final accounts taking into consideration the trial balance for the year ended 31st December 2018.
| Debit (₹) | Credit (₹) | |
| Capital | 10,180 | |
| Drawings | 3,000 | |
| Opening Stock | 3,500 | |
| Leasehold Premises | 28,000 | |
| Purchases and Sales | 20,300 | 84,180 |
| Salaries and Wages | 5,600 | |
| Carriage Outward | 700 | |
| Rent | 900 | |
| Insurance | 600 | |
| Returns | 160 | 300 |
| Bank of India Current A/c | 2,200 | |
| Union Bank of India Current A/c | 600 | |
| Bad Debts | 300 | |
| Heavy Vehicles | 20,000 | |
| Motor Car | 11,000 | |
| Vehicle and Car Expenses | 2,500 | |
| Rent Earned | 1,500 | |
| Commission Paid | 800 | |
| Debtors and Creditors | 4,000 | 5,000 |
| Cash | 200 | |
| Import Duty and Clearing Charges | 1,600 | |
| Packing Expenses | 2,400 | |
| Loan from Mr. Baxi (long term) | 6,000 | |
| 1,07,760 | 1,07,760 |
Closing stock is ₹ 7,500.
The following is the trial balance of Mr. C. Nariman for the year ended 31st December, 2018. Complete the final accounts for him, after incorporating the adjustments and thereafter complete the required details listed by him.
| Debit (₹) | Credit (₹) | |
| Capital | 65,000 | |
| Drawings | 4,000 | |
| Purchases and Returns Outward | 25,000 | 4,000 |
| Cash Sales | 17,000 | |
| Credit Sales | 54,000 | |
| Stock (1.1.2018) | 9,000 | |
| Salaries | 10,000 | |
| Wages | 3,000 | |
| Carriage Inward | 2,000 | |
| Bad Debts | 500 | |
| Petty Cash | 100 | |
| Cash and Bank | 6,000 | |
| Rent, Rates and Taxes | 4,000 | |
| Discounts | 400 | 500 |
| Telephones, Postage and Stationery | 1,500 | |
| Bank Loan on Mortgage | 14,000 | |
| Premises and Godowns | 35,000 | |
| Machinery | 50,000 | |
| Debtors and Creditors | 10,000 | 6,000 |
| 1,60,500 | 1,60,500 |
Stock on 31.12.2018 is ₹ 30,000.
From the following Trial Balance of Mr. Rajesh, prepare final accounts for the year ended 31.3.2019:
| Debit (₹) | Credit (₹) | |
| Opening Stock | 19,000 | |
| Salaries | 10,500 | |
| Wages | 8,000 | |
| Railway Freight - Purchases & Imports | 2,500 | |
| General Office Expenses | 13,000 | |
| Annual Insurance | 2,000 | |
| Plant and Machinery | 50,000 | |
| Purchases and Sales | 1,20,000 | 2,53,000 |
| Rent | 7,500 | |
| Bad Debts and its Recoveries | 300 | 1,000 |
| Buildings and Sheds | 60,000 | |
| Bills Receivable and Payable | 12,200 | 4,000 |
| 10% Bank of Progress Loan | 50,000 | |
| Travel Costs | 15,000 | |
| Returns and Price Adjustments | 3,000 | 1,500 |
| Legal and Other Consultancy Fees | 10,000 | |
| Repairs | 8,600 | |
| Bank Account | 10,000 | |
| Capital and Drawings | 4,500 | 65,000 |
| Interest | 6,000 | |
| Debtors and Creditors | 35,000 | 22,600 |
| 3,97,100 | 3,97,100 |
Closing stock is valued at ₹ 45,000 (Its market price is only ₹ 40,000).
The following is the trial balance of Mr. M. Moonlite as on 31.3.2019. The Closing Stock as on 31.3.2019 is ₹ 40,000.
| Debit (₹) | Credit (₹) | |
| Salaries | 20,000 | |
| Royalty | 55,000 | |
| Capital | 2,60,000 | |
| Freehold Land | 60,000 | |
| Stock as on 1.4.2018 | 25,000 | |
| Goods Traded in | 2,05,000 | 3,55,000 |
| Drawings | 5,000 | |
| Brokerage | 4,000 | 6,000 |
| Motive Power & Coke | 6,000 | |
| Insurance | 7,000 | |
| Cash & Bank | 20,000 | 9,900 |
| Administrative & Selling Expenses | 55,900 | |
| Wages | 15,000 | |
| Returns | 10,000 | 5,000 |
| Suppliers & Customers | 30,000 | 15,000 |
| Interest on Overdraft and Borrowings | 18,000 | |
| Electricity | 5,000 | |
| Goodwill | 50,000 | |
| Leasehold Land | 20,000 | |
| Fixed Assets (other than land) | 1,50,000 | |
| 7,05,900 | 7,05,900 |
Compile the final accounts for the owner.
The following balances were extracted from the books of Sri S. Kumar on 31st December 2018.
| Dr. (₹) | Cr. (₹) | |
| Capital | 24,500 | |
| Drawings | 2,000 | |
| General Expenses | 2,500 | |
| Building | 11,000 | |
| Machinery | 9,340 | |
| Opening Stock | 16,200 | |
| Power | 2,240 | |
| Taxes & Insurance | 1,315 | |
| Wages | 7,200 | |
| Sundry Debtors | 6,280 | |
| Sundry Creditors | 2,500 | |
| Charity | 105 | |
| Bad Debts | 550 | |
| Bank Overdraft | 11,180 | |
| Sales | 65,360 | |
| Purchases | 47,000 | |
| Scooter | 2,000 | |
| Bad Debt Provision | 900 | |
| Commission | 1,320 | |
| Trade Expenses | 1,780 | |
| Bills Payable | 3,850 | |
| Cash | 100 | |
| 1,09,610 | 1,09,610 |
Stock on 31st December 2018 was valued at ₹ 23,500.
Prepare Final Accounts for the year ended 31st December 2018.
The following is the Trial Balance of ABC Industries as on 31st December 2015.
| TRIAL BALANCE of ABC Industries as on 31.12.2015 | |||
| Particulars | Amount (Dr.) | Particulars | Amount (Cr.) |
| Salaries | 4,000.00 | Sales | 83,000.00 |
| Cash Balance | 2,000.00 | Rent Received | 2,000.00 |
| Bank Balance | 3,000.00 | Purchases Returns | 1,000.00 |
| Wages | 1,500.00 | Creditors | 7,000.00 |
| Insurance | 500.00 | Capital Account | 25,000.00 |
| Trade Expenses | 7,000.00 | ||
| Discount Allowed | 750.00 | ||
| Opening Stock (1.1.2015) | 5,000.00 | ||
| Buildings | 40,000.00 | ||
| Furniture | 15,000.00 | ||
| Sales Returns | 250.00 | ||
| Drawings | 1,000.00 | ||
| Debtors | 5,000.00 | ||
| Purchases | 30,000.00 | ||
| Legal Charges | 1,000.00 | ||
| Advertisement Expenses | 2,000.00 | ||
| 1,18,000.00 | 1,18,000.00 | ||
The closing stock was valued at ₹ 9,000.
You are required to prepare a Trading Account and a Profit and Loss Account for the year ending 31st December 2015 and a Balance Sheet as on 31st December, 2015.
