What is Trading Account? Give a specimen of Trading Account.


Ans – Meaning of Trading Account:
          Trading Account is an account prepared to know the gross profit or gross loss arising during the accounting period as of buying and selling of goods.

PURPOSE: Trading Account is prepared for the following purpose:
(a) To ascertain gross profit or gross loss as a result of the trading activities of a business.
(b) To enable management to make a comparison of gross profit/loss of the current year with that of the previous year.

SPECIMEN: Trading Account is prepared in the following format:
TRADING ACCOUNT OF M/s…………

For the year ending

Particulars
Rs.
Particulars
Rs.
To Opening Stock
To Purchases                        ***
Less: Returns outwards        ***
To Direct Expenses:
Wages
Freight/Carrier Inward
Octroi/Local Taxes
Import/Customs duty
Coal, Gas and Water
Fuel/Power
Royalty
Factory Expenses
Packing Charges etc.
To Gross Profit c/d
***

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***
***
By Sales                         ***
Less: Returns Inwards    ***
By Closing Stock









By Gross Loss c/d

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