Explanation:

Closing stock is the stock of unsold goods that a company holds at the end of an accounting period. It is considered as a current asset for the company.

When closing stock appears in the Trial Balance, it indicates that the value of closing stock has been included in the accounts. The treatment of closing stock depends on the type of account it is being included in.

If closing stock appears in the Trading Account, it is treated as a direct expense and is deducted from the cost of goods sold to arrive at the gross profit. This is because closing stock is the value of unsold goods that are part of the cost of goods sold.

If closing stock appears in the Profit and Loss Account, it is treated as an indirect expense and is deducted from the net profit to arrive at the final profit. This is because closing stock is the value of unsold goods that have not been included in the cost of goods sold.

However, if closing stock appears in the Balance Sheet, it is treated as a current asset and is shown under the head ‘Inventories’ on the asset side of the Balance Sheet. This is because closing stock is part of the company’s inventory and represents the value of unsold goods that are available for sale in the future.

Closing stock is not included in the Profit and Loss Appropriation Account as it is not a revenue or expense account. The Profit and Loss Appropriation Account is used to distribute the profit earned by the company among the various stakeholders such as shareholders, reserves, etc.

Conclusion:

Hence, when closing stock appears in the Trial Balance, it is included in the Balance Sheet under the head ‘Inventories’ on the asset side of the Balance Sheet.