Inventory Sheet
Trial Balance
11. Pricing. In taking an inventory, all goods must be priced at cost—never at the selling price. If selling prices are used, credit is being taken for profits which cannot be earned until the goods are sold. It may even be found advisable at times to list goods at less than cost. Some classes of goods deteriorate; at other times the stock may contain merchandise that was purchased on a high market, on which prices have been materially lowered. To price such goods at actual cost prices is creating fictitious values. Conservatism is necessary in pricing an inventory, for the taking of credit for unearned profits is wrong in principle.
This inventory shows the cost of goods in stock to be $1,042.77.
12. Closing the Books. This is the process of balancing all revenue accounts, and transferring the balances to the profit and loss account, the balance of the account being finally transferred or closed into the capital, surplus, or deficiency account, as the case may be. We have learned that in a single proprietorship, profit and loss is finally closed into capital or investment account.
ERECTING SHOP IN THE WORKS OF THE BALDWIN LOCOMOTIVE WORKS, PHILADELPHIA, PENNA.