final account with to help of journal / subsidjany book of sole trading concorn
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Final accounts of a sole trader
It is a nominal account
It contains items of revenue nature only. No item of capital nature.
Its closing balance indicates gross profit or gross loss.
On debit side:
the cost of goods sold and
all expenses related to purchases.
On credit side:
sale proceeds
Credit balance
represents gross profit
and
Debit balance
represents gross loss.
Calculation Basis-: Gross Profit = Net Sales – [Cost of goods sold + Direct production expenses]
Where,
Net Sales = Total sales – Sales returns
Cost of goods sold = Opening stock + Net Purchases – Closing stock
Net Purchases = Total purchases – Purchase returns
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