Why we show always closing stock in credit?
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Answer Posted / bhushan
As per the matching principal of the accounts only those
expenses which are related to earn the revenue are debited
to the trading & profit and loss account, so that we can
arrive at the accurate profit or loss figure. And as the
purchase of material is debited to the trading account we
need to separte the material cost which does not match to
the revenue during the year hence we put the closing stock
which is not utilised yet to earn the revenue and will be
utilised in the future.Thats why we always put the closing
stock fugure to the credit side of Trading & P&L a/c
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