In Trading and Profit and Loss account, opening stock appears on the debit side because it forms the part of the cost of sales the current accounting year.TrueFalse (2024)

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Standard XII

Accountancy

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closing stock minus opening stock gives you the cost of goods used from the stock in hand. That's why opening stock is debited and closing stock is credited - To give effect to how much stock is used during the year for the sales.

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In Trading and Profit and Loss account, opening stock appears on the debit side because it forms the part of the cost of sales for the current accounting year.

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State whether the following statement are true or false.

1. Final Accounts are prepared on the basis of Trial Balance.
2. Trading Account is a part of Profit & Loss Account.
3. Profit Loss Account is prepared to find out Gross Profit or Gross Loss.
4. Gross Profit or Gross Loss is transferred to Balance Sheet.
5. An amount of net profit is added to the capital.
6. All indirect expenses are debited to trading account.
7. Balance Sheet is a statement and not an account.
8. Capital account is a personal account.
9. Amount of prepaid expenses appears on assets side.
10. Bank Overdraft is a liability of business concern.

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From the following Trial Balance you are required to prepare trading and profit and loss account for the year ending March 31, 2017 and Balance Sheet on that date.

Particulars	Amount (₹)	Particulars	Amount (₹)
Opening stock	25,000	Sales	7,00,000
Furniture	16,000	Creditors	72,500
Purchases	5,55,300	Bank Overdraft	50,000
Carriage Inwards	4,700	Provision for bad and doubtful debts	2,100
Bad debts	1,800	Discount	500
Wages	52,000	Capital	2,00,000
Debtors	80,000	Purchases Return	20,000
Sales Return	15,000
Rent	24,000
Miscellaneous Expenses	3,400
Salaries	68,000
Cash	8,900
Drawings	14,000
Buildings	1,60,000
Advertising	10,000
Interest on Bank Overdraft	7,000

	10,45,100		10,45,100

Adjustments

1. Closing stock valued at ₹ 36,000.
2. Private purchases amounting to ₹ 5,000 debited to purchases account.
3. Provision for doubtful debts @ 5% on debtors.
4. Sign board costing ₹ 4,000 includes in advertising.
5. Depreciate furniture by 10%.

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From the following information, prepare the Trading Account for the year ended 31st March, 2017:

	₹
Cost of Goods Sold	12,10,000
Opening Stock	50,000
Closing Stock	80,000
Carriage Inwards	15,000
Sales	15,00,000