What Is Trading Account Trading Account is prepared to calculate the Gross Profit of an entity for a particular time period. Time period may be 1 year, 3 months or 1 month. Trading Account shows following items: Sales / Revenues Sales Returns Cost of Sales and Gross Profit Cost of Sales = Opening Stock (Inventories) + Purchases - Closing Stock (Inventories) Gross Profit = Sales - Cost of Sales Example: · ABC Company has following details · Inventory at 1 st September, 2017 = $100 · Purchases of stock during the year = $300 · Inventory at 31 ST August, 2018 = $150 · Sales for the year = $400 1) Calculate Cost of Sales and Gro...
Covering Financial Accounting, Cost and Management Accounting For Business and Finance Students