Topic Content:
- Meaning of Trading Account
- Terminologies Involved in The Preparation of The Trading Account
A trading account is prepared for the purpose of finding the gross profit or loss of a business at a particular period. It is prepared to conform to the rules of double entry. The Trading Account is a revenue account and forms part of the double-entry system. The Trading account contains:
On the debit side:
(i) Opening stock
(ii) Add Net Purchases (Purchases less return outwards)
(iii) Add carriage Inward
(iv) Less: Stock at close
(v) Equal to Cost of goods Sold
On the Credit side:
(i) Sales
(ii) Less: return Inwards
(iii) Credit side less debit side
(iv) Equal to gross profit or gross loss
Terminologies Involved in The Preparation of The Trading Account:
1. Stock of Goods: This is divided into opening stock and closing stock.
You are viewing an excerpt of this Topic. Subscribe Now to get Full Access to ALL this Subject's Topics and Quizzes for this Term!
Click on the button "Subscribe Now" below for Full Access!
Subscribe Now
Note: If you have Already Subscribed and you are seeing this message, it means you are logged out. Please Log In using the Login Button Below to Carry on Studying!
Responses