Closing stock is given outside trial balance because it have two sided effect one it's is written in cr of trading account and other in balance sheet as asset . any thing which is given as adjustment outside the trial balance always affect two accounts in financial statements

Introduction:
Closing stock refers to the value of unsold goods or inventory at the end of the accounting period. It is an essential component in determining the cost of goods sold and calculating the accurate net profit for a business. While the trial balance includes all the accounts to prepare the financial statements, the closing stock is usually given outside the trial balance. There are several reasons why closing stock is treated differently.

Reasons for closing stock being given outside the trial balance:

1. Valuation:
Closing stock needs to be valued accurately to reflect its true worth in the financial statements. The value of closing stock is determined by considering factors such as purchase cost, market value, obsolescence, and other relevant factors. Therefore, it requires a separate valuation process, which is distinct from the trial balance.

2. Estimation:
In many cases, the closing stock is estimated at the end of the accounting period. This estimation involves assessing the value of unsold goods based on sales trends, market conditions, and other factors. Since an estimation is subjective and not based on actual figures, it is not appropriate to include it in the trial balance, which aims to present accurate and verifiable information.

3. Adjusting entry:
Closing stock is typically adjusted through a journal entry at the end of the accounting period. This adjusting entry helps to account for the value of closing stock and its impact on the financial statements. Since the trial balance only includes accounts with their respective balances before adjustments, closing stock is given outside the trial balance to reflect the necessary adjustments.

4. Specific disclosure:
Closing stock is an important piece of information for stakeholders, including shareholders, lenders, and potential investors. By presenting closing stock as a separate item outside the trial balance, it allows for easy identification and disclosure of this crucial information. This transparency ensures that the financial statements provide a clear picture of the business's financial position.

Conclusion:
Closing stock is given outside the trial balance due to its unique nature of valuation, estimation, adjusting entry, and specific disclosure requirements. By treating closing stock separately, it enables accurate representation of the financial statements and ensures transparency for stakeholders.