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Closing Stock

 Closing stock is the stock which is the part of purchased stock and produced stock but did not sold upto end of the year. Stock at the end date at our store or production department or sale department which is unsold will be closing stock. 

Its calculation and adjustment is must in the final accounts because we do not record it, so, it does not come in the book of accounts and only at the end of year, it is calculated, so, trial balance will not show this closing account balance.

We can calculate gross profit if we will calculate the closing stock in our final accounts. 

Now, first question is how to calculate the closing stock.


 For calculating closing stock, we must have the physical quantity and we multiply it with its cost price or market price whichever is less. 

For more detail, you must read : At what rate will we calculate closing stock ?

Now, when we will find the closing stock value, we will pass the adjustment entry

Closing stock account Debit 

Trading Account Credit 

We will open Two accounts after this adjustment entry

Closing Stock account 

and its debit side, we will show trading account

and balance C/d its credit side

We will open next account is Trading account

and its credit side, we will show 

By closing account 

In balance sheet

In balance sheet, we will show closing stock under current asset. 

Adjusted Purchase

If adjusted purchase account is showing in the trail balance, then we will not show closing stock in the credit side of trading account because all adjustment done in adjusted purchase account 

adjusted purchase = opening stock of purchase + new purchase - purchase return - closing stock 

now we will its balance in the trading account's debit side only

Opening stock will be in the trade balance debit side which is closing stock in the balance sheet in the end of previous year. 

Download please 

11th Class Accounting Notes

Financial Accounting eBook 

Read Also

Adjustments in Final Accounts - Part 1
Adjustments in Final Accounts - Part 2
Adjustments in Final Accounts - Part 3
Adjustments in Final Accounts - Part 4

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Accounting Education: Closing Stock
Closing Stock
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