closing stock

in trial balance, why you should enter closing stock on both debit and credit side, do i need to think as close stock (p&l) and close stock (b&s), am i right?
many thanks

Comments

  • Paul24
    Paul24 Registered Posts: 578
    Yes.

    Inventory figure on the balance sheet reflects the closing stock as at last day of the year.

    It is included in cost of sales on the P&L

    Extracted as;

    Cost of Sales

    Opening Stock
    Add Purchases
    Less Closing Stock

    It is reducing the cost so is therefore a credit in P&L. It is an asset, so is therefore a debit in the BS.

    Paul
  • meibaker
    meibaker Registered Posts: 481
    thanks
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