Trading Account

This account is the very first step for preparing Profit and Loss Statement and Balance Sheet. Direct sales and direct expenses like wages, octroi which are related to the production or procurement of a product are taken into account while preparing the Trading account. The closing stock and opening stock of goods are also taken into account to arrive at the gross profit/loss. The gross profit or loss can be determined only from the Trading Account.

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Related Terms

• Tangible Assets
• Types of Accounts
• Trial Balance