Financial Statements - II

opening and closing stocks are adjusted through purchases, the trial balance does not show any opening stock. Instead, the closing stock shall appear in the trial balance (not as additional information or as an adjustment item) and so also the adjusted purchases. In such a situation, the adjusted purchases shall be debited to the trading and profit and loss account. The closing stock shall be shown on the assets side of the balance sheet as shown below: Balance Sheet of Ankit as at March , Liabilities Assets Owners funds Non-Current Assets Add Net profit , , Current Assets Non-Current Liabilities , Long-term loan Bank Current Liabilities Cash , , It is quite common for a business enterprise to have some unpaid expenses in the normal course of business operations at the end of an accounting year. Such items usually are wages, salaries, interest on loan, etc. When expenses of an accounting period remain unpaid at the end of an accounting period, they are termed as outstanding expenses . As they relate to the earning of revenue during the current accounting year, it is logical that they should be duly charged against revenue for computation of the correct amount