[Rajiv Gupta]

Dear Sir,

While finalizing the annual accounts we show the closing stock in our trading account while inventory is the part of current assets so we are also showing the inventory in our balance sheet.

But question is that inventory should come only in balance sheet not in trading account also.

Why we have to show the inventory simultaneously in trading account as well as in balance sheet.

[ArcSine]

I hope I'm reading your question correctly... let me know if not. When you say "trading account", are you referring to something like the "cost of goods sold" section of your Income Statement, or PnL?

If that's the case, then your end-of-period inventory is properly shown on your Balance Sheet. It also plays a role in your Income Statement, but only as an element in the computation of Cost of Goods Sold.

For instance, if you start the year with inventory of 10, during the year you purchase or make new inventory of 7, and your year-end count shows you with inventory on hand of 8, then clearly you sent inventory of 9 out the door during the year.

So in other words, your Cost of Goods Sold for the year is 10 + 7 - 8 = 9. The end-of-year inventory thus plays a role in computing your COGS, which in turn appears on your Income Statement.

But that doesn't amount to a "double reporting" of your inventory--it's only on your PnL as a computational factor.

I hope this helps, and I apologize if I missed the gist of your question.

...it was early and I was full of no coffee...