difference Between trading account and profit and loss account
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BASIS FOR COMPARISON TRADING ACCOUNT PROFIT & LOSS ACCOUNT
Meaning Trading account is an account which indicates the result of trading activities, such as purchase and sale of products. Profit & loss account is an account, representing the actual profit earned or loss sustained by the business during the accounting period.
Preparation It is prepared to ascertain gross profit for the period. It is prepared to ascertain net profit for the period.
Transfer of balance Balance of trading account is transferred to Profit & Loss Account. Balance of profit & loss account is transferred to Capital Account.
Accounts for Direct revenue and direct expenses Operating and non-operating incomes and expenses
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