From the following trial balance. Opening stock 2,40,000 , capital 3,60,000 ,Debtors COGS 6,00,000 building 2,00,000 closing stock creditors indirect expenses 80,000 sales 300000?

Question

Answer

Analysis of Trial Balance

Opening Stock:
- Opening stock is the value of inventory at the beginning of the accounting period, which in this case is 2,40,000.

Capital:
- Capital represents the owner's investment in the business, which is 3,60,000 in this scenario.

Debtors:
- Debtors are the amounts owed to the business by customers, which are not yet paid. It is a part of the current assets.

COGS (Cost of Goods Sold):
- COGS represents the direct costs of producing goods that were sold during the accounting period.

Building:
- Building is a fixed asset and represents the value of the building owned by the business, which is 2,00,000.

Closing Stock:
- Closing stock is the value of inventory at the end of the accounting period, which needs to be subtracted from the COGS to calculate the cost of goods sold.

Creditors:
- Creditors are the amounts owed by the business to its suppliers or vendors.

Indirect Expenses:
- Indirect expenses are the operating expenses of the business that are not directly related to the production of goods or services.

Sales:
- Sales represent the total revenue generated from selling goods or services during the accounting period.

Summary:
- By analyzing the trial balance, we can see the financial snapshot of the business, including its assets, liabilities, capital, revenues, and expenses. It helps in preparing the financial statements and making informed business decisions.

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