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
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Particulars
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Rs.
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Particulars
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Rs.
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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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***
***
***
***
***
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By Sales ***
Less: Returns Inwards ***
By Closing Stock
By Gross Loss c/d
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***
***
***
***
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