Trading account

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1. TRADING ACCOUNTS Presented By, Fenil Jose MBA PT Sem 1 1 8/13/2019 2. TRADING ACCOUNTS  Gross Profit or Gross Loss arise due to Trading Activities  Cost of goods…
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  • 1. TRADING ACCOUNTS Presented By, Fenil Jose MBA PT Sem 1 1 8/13/2019
  • 2. TRADING ACCOUNTS  Gross Profit or Gross Loss arise due to Trading Activities  Cost of goods Sold & Value for which they have been Sold away 2 8/13/2019
  • 3. NEEDS  Check Sales Revenue & Cost of Sales  Evaluate Gross Profit & Gross Loss  Compare Gross Profit & Gross Loss  Check indirect Expenses 3 8/13/2019
  • 4. CONTENT  All Cost of Goods starting with the Costs of Opening Stocks  Purchases of goods  Other Direct expenses Debited Trading A/C  Sales Revenue  Cost of Closing Stocks Credited to Trading A/C  Credit Side Greater Gross Profit  Debit side Greater Gross Loss 4 8/13/2019
  • 5.  Gross Profit = Sales - Cost of Goods sold  Cost of Goods Sold = Sales - Gross Profit or  Cost of Goods Sold = Opening Stock +Purchase + other Expenses – Closing Stock 5 8/13/2019
  • 6. FORM OF TRADING ACCOUNT Dr Cr Particulars Amount Particulars Amount To Opening Stocks By Sales To Purchases Less: Sales Returns Less: Purchases Returns By Closing Stocks To Wages To customs and import duty To Carriage expenses To Royalty To manufacturing expenses To Packing expenses Total Total To G.P transferred to Profit and Loss account By G.L Transferred to profit and loss account 6 8/13/2019
  • 7.  Opening Stock : Closing Stock of Previous Year  Purchases : Goods Bought for Resale  Purchases Returns: Goods Returned to Suppliers  Wages: Remuneration Paid to manual or Productive workers  Expense on Packing: Expense on Primary Packing of goods  Carriage or Carriage inwards : Expenses incurred for bringing purchased goods  Royalty : Remuneration Paid to owner for using his right. Direct Expense  General Considerations: All expenses incurred for bringing purchased goods ready to sales 8/13/2019 7
  • 8.  Adjusted Purchases : Purchases +Opening Stock – Closing Stock  Sales : Sales of Goods (Cr)  Sales Returns : Goods returned by customers Deducted from Sales to get NET Sales  Closing Stocks : Cost of Goods Remain Unsold at the end of accounting period 8/13/2019 8
  • 9. CLOSING ENTRIES  At the End of Accounting period, accounts of expenses and incomes are closed to trading and Profit & Loss Accounts  Journal Entry required for this Purpose is called Closing Entries Journal Entries to Close various Items  Purchases Returns to Purchases A/C Purchases Returns A/C Dr Purchases A/C  Opening Stock, Net Purchases and Direct Expenses to Trading A/C Trading A/C Dr Opening Stock A/C Purchases A/C Direct Expenses A/C 9 8/13/2019
  • 10.  Sales Returns to Sales A/C Sales A/C Dr Sales Returns  Net Sales to Trading A/C Sales A/C Dr Trading A/C  Closing Stock A/C to Trading A/C Closing Stock A/C Dr Trading A/C  Closure of Trading A/C 1. If Gross Profit Trading A/C Dr Profit & Loss A/C 10 8/13/2019
  • 11. 2. If Gross Loss Profit & Loss A/C Dr Trading A/c 11 8/13/2019
  • 12. REFERENCES  Financial Accounting- S.N. Maheswari 8/13/2019 12
  • 13. THANK YOU 8/13/2019 13
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