If closing inventory appears inside the Trial Balance, what is its proper accounting treatment?
Answer and explanation
Correct answer: D. Shown only on the assets side of the balance sheet
- Step 1: When closing stock appears inside the Trial Balance, it indicates that it has already been adjusted against purchases (Purchases is adjusted purchases).
- Step 2: Therefore, it has already been factored into cost of goods sold.
- Step 3: It is not credited to Trading Account again; it appears only on the assets side of the Balance Sheet.
Answer
Shown only on the assets side of the balance sheet.
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