closing stock in trial balance

System
System Posts: 100,534 🤖 Admin 🤖
edited June 18 in AAT student discussion
Hi there,<BR><BR>Is it right when you do trial balance you need entry closing stock twice?One Dr entry for closing stock B/S ,the other Cr entry for closing stock P&L ,but for opening stock only one Dr entry ?<BR><BR>Please help ,i am really confused!!<BR>chaoliss<BR>

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  • System
    System Posts: 100,534 🤖 Admin 🤖
    closing stock in trial balance

    That is correct - Opening Stock Dr P&L - Closing Stock Dr BS and Cr P&L
  • System
    System Posts: 100,534 🤖 Admin 🤖
    closing stock in trial balance

    thank you ,you have saved my day <BR>good luck on your FRA exam<BR><BR>chaoliss
  • System
    System Posts: 100,534 🤖 Admin 🤖
    closing stock in trial balance

    Hi<BR>That's right!<BR>The credit closing stock is for the cost of sales calculation in the trading,profit and loss account.-it increases gross profit(thus a credit)<BR>The debit closing stock is recorded as an asset in the balance sheet-this is why it is a debit.<BR>Opeing stock is also used in the cost of sales in the trading ,profit and loss account- it decreases gross profit-therefore a debit!<BR>Hope this helps.<BR>Good luck and stay calm-you know your stuff...
  • System
    System Posts: 100,534 🤖 Admin 🤖
    closing stock in trial balance

    Hi.<BR><BR>Yes, you enter closing stock as you said - remember that closing stock is part of your cost of sales in the trading account so it's a credit there. It is also an asset so it appears as a debit on your balance sheet.<BR><BR>Your opening stock also appears in the cost of sales calculation so appears as a debit on your P&L.<BR><BR>Scott.

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