Trading And Profit And Loss Accounts For Dummies


Loss Accounts Dummies For Profit And And Trading


A business keeps various types of financial record to monitor its performance and ensure that taxes are paid. These include cash flow statements, profit and loss accounts and a balance sheet. Trading accountThe trading account shows the income from sales and the direct costs of making those sales. These reports are prepared as frequently as managers need them, usually monthly or quarterly — perhaps even weekly in some businesses. After all the additions and subtractions, the final tally tells Trading And Profit And Loss Accounts For Dummies whether the company earned a profit or suffered a loss and how much.

Zero means it broke even. A negative number shows the company lost money. Profit is calculated in a Trading and Profit and Loss Account. This is divided in a Trading Account which calculates the Gross Profit for the period, and a Profit and Loss Account which calculates Net profit for the period. Trading involves buying and selling. In the trading account the cost of goods sold is subtracted from Net Sales for the period to calculate Gross Profit. At the end of a financial period, all expense and revenue accounts are closed to a summarizing account usually called a Profit and Loss Account.

This is the financial statement that summarizes revenues and expenses for a specific period of time, usually a month or a year. Trading account is prepared to ascertain the gross profit or gross loss made by the company during the accounting period. Profit and loss account is prepared to ascertain the net profit or net loss made by the company during the accounting period.

Profit and loss account is also called as income statement. Format Of Trading And Profit And Loss Account:-Trading and profit and loss account are generally prepared together and not separately. There are two formats by which trading and profit and loss account ca.




Trading And Profit And Loss Accounts For Dummies

Trading And Profit And Loss Accounts For Dummies


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