PART 07: FINANCIAL ACCOUNTING

 


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FINANCIAL ACCOUNTING
PART 07
 
FINAL ACCOUNTS OF SOLE TRADER
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Preparation of Trading Account

Trading Account is prepared by debiting the account with opening stock, purchases and direct expenses
 
    Trading A/C Dr.
        To  Opening stock A/C
        To  Purchases A/C
        To  Direct Expenses A/C
   
And Credited with sales
    Sales A/C Dr.
        To Trading Account
 
and closing stock
    Closing Stock A/C Dr.
        To Trading Account 
 
The difference between debit side and credit side of the account gives gross profit or gross loss
 
If credit side total is more, the difference is gross profit
    Trading Account Dr.
        To Profit and Loss A/C
 
And if debit side more, the difference is gross loss
    Profit and Loss A/C Dr.
        To Trading Account
 
Purchase Return
    Purchase Return A/C Dr.
        To Purchase A/C
 
Sales Return
    Sales A/C Dr.
        To Sales Return A/C
 
 


 
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