Why does closing stock not appear in Trial Balance?
In SwilERP Software, Why does closing stock not appear in Trial Balance?
While viewing the trial balance in SwilERP, the closing stock does not appear in this. The question that occurs in the mind is why? Here is the answer written below:
Reasons
Closing stock isn't shown in the trial balance because it is already a part of (opening stock+purchases), so recording Closing stock in the trial balance would mean you are recording the same thing twice. Closing Stock is an amount of unsold stock lying in your business on a given date.
In the other way, during an accounting period, the remaining balance of the unsold goods from the purchases made is called closing stock. The value of total purchases is already included in the Trial Balance. The effect will be duplicated if closing stock is included in the Trial Balance. Hence, it will not reflect in the Trial Balance.
For Example:
- Assume total purchases during an accounting period inside a Trial Balance are: 20,000
- Closing Stock: 2,000 (This closing stock amount is already included in purchases)
If both of these figures are shown in the trial balance, then there will be a mismatch of 2,000 because the effect has now been doubled in the trial balance. Also, no separate account is opened for closing stock inside the general ledger. Therefore, closing stock is not to be shown in the trial balance.
To learn the process of how to view trial balance in SwilERP, go through the below-given article URL:
Reference link: Trial Balance
Reference image: Image of trial balance