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Saturday, April 3, 2010

Items shown on the Credit side of Trading Account

  1. Sales and sales return: Sales refers cash or credit sale of trading goods. It is credited to trading account. Sales return is deducted from the sales figure to get net sales. Sales of fixed assets are ignored.
  2. Closing stock: It denotes the goods in hand with the firm at the end of the accounting period. Closing stock also may include raw material or work-in-progress or finish goods. Generally, closing stock is given outside the trial balance which must be shown on the credit side of trading account and on the asset side of balance sheet. However, it is entered only in credit side of trading account if it is given inside the trial balance. Closing stock is valued at cost or market price which ever is lower in case of both prices.

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