Question

Explain how closing stock is treated in final accounts?

Answer 1

The unsold goods in the business at the end of the accounting period are termed as closing stock. As per As-2 (Revised), the stock is valued at cost price or net realizable value, whichever is lower.

Presentation in final accounts:

1. In the trading account: Shown on the credit side.
2. In the balance sheet: Shown on the assets side under current assets.