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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 Opening stock A/C
To Purchases A/C
To Direct Expenses A/C
To Direct Expenses A/C
And Credited with sales
Sales A/C Dr.
To Trading Account
Sales A/C Dr.
To Trading Account
and closing stock
Closing Stock A/C Dr.
To Trading Account
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
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
Profit and Loss A/C Dr.
To Trading Account
Purchase Return
Purchase Return A/C Dr.
To Purchase A/C
Purchase Return A/C Dr.
To Purchase A/C
Sales Return
Sales A/C Dr.
To Sales Return A/C
Sales A/C Dr.
To Sales Return A/C
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