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Proforma of trading account. The following is the pro-forma of Profit and Loss Account when it is prepared as a separate account. Preparation of Trading Account. It is a part of the final accounts of the entity.
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The motive of preparing trading and profit and loss account is to determine the revenue earned or the losses incurred during the accounting period. Activities which generate revenue for the business such as Sales of Services or Goods Closing Stock are shown on the credit side Right whereas activities which are a part of the Cost of Goods Sold such as the purchase of raw material opening stock direct expenses etc. Trading account is a statement which is prepared by a business firm.
At the end of the financial year or at the end of the financial accounting period an entity prepares the financial accounting statements to know the profit and loss and also the financial position of the business. The invoice will typically describe the purchased items and other important. In other words the trading account gives details of total sales total purchases and.
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