Question

how to prepare trading account

Answer 1

Answer:

Trading account is the first step in the process of preparing final accounts. It helps in finding out the gross profit or gross loss during an accounting year, which is an important indicator of business efficiency.

It is normally prepared by a merchandising concern which purchases and sells the goods during a particular period.

The trading account shows the gross profit or gross loss during the accounting period. Trading account is based on matching the selling price of goods and services with the cost of goods sold and services rendered.