The correct answer is: A. surplus, shortage of stock
A stock adjustment account is a temporary account used to record the difference between the actual physical count of inventory and the inventory balance recorded in the accounting records. The account is debited for any surplus of inventory and credited for any shortage of inventory.
A surplus of inventory occurs when the physical count of inventory is greater than the inventory balance recorded in the accounting records. This can happen for a number of reasons, such as errors in the physical count, theft, or misplacement of inventory.
A shortage of inventory occurs when the physical count of inventory is less than the inventory balance recorded in the accounting records. This can happen for a number of reasons, such as errors in the accounting records, theft, or damage to inventory.
The stock adjustment account is typically closed at the end of the accounting period to the cost of goods sold account. This ensures that the cost of goods sold account reflects the actual cost of goods sold during the period.
Here is a brief explanation of each option:
- Option A: surplus, shortage of stock. This is the correct answer. A stock adjustment account is debited for any surplus of inventory and credited for any shortage of inventory.
- Option B: shortage of stock, surplus. This is incorrect. A stock adjustment account is debited for any surplus of inventory and credited for any shortage of inventory.
- Option C: excess, loss. This is incorrect. A stock adjustment account is not used to record losses. Losses are recorded in the income statement.
- Option D: None of these. This is incorrect. Option A is the correct answer.