Question

Practical questions
• From the following particulars extracted from the books of Ganguli, prepare trading and profit and loss
account and balance sheet as at 31st March, 2016 after making the necessary adjustments:​

Answer 1

Answer:

Non-manufacturing entities are the trading entities, which are engaged in the purchase and sale of goods at profit without changing the form of the goods. For accounting, profit is measured at two levels: (a)  Gross Profit (b)  Net Profit The principal function of final statements of account (Trading Account, Profit and Loss Account and the Balance Sheet) is to exhibit truly and fairly the profitability and the financial position of the business to which they relate. In order that these may be properly drawn up, it is essential that a proper record of transactions entered into by the business during a particular accounting period should be maintained. At the end of the year, it is necessary to ascertain the net profit or the net loss. For this purpose, it is first necessary to know the gross profit or gross loss. Gross Profit is the difference between the selling price and the cost of the goods sold. For a trading firm, the cost of goods sold can be ascertained by adjusting the cost of goods still on hand at the end of the year against the purchases.

Explanation:

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