Multiple choice

The trial balance of M/s R Ltd. shows closing stock of Rs. 5, 00, 000. It will be recorded in

  1. trading account

  2. profit and loss account

  3. profit and loss appreciation account

  4. balance sheet

Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Closing stock is an unsold asset at year-end and appears in the balance sheet on the assets side. It is shown in the trading account only for calculating gross profit, but its final recording destination is the balance sheet. Option D correctly identifies this.