Prepare Trading and profit and loss account for the year ended 31st December 2012 and a Balance sheet as on that date
Answers
A trading account is an account that is prepared to determine the gross profit of a firm. It is one among the final accounts that are usually prepared. Under this account, items like purchases, purchase returns, sales, sales returns, wages, opening stock and closing stock or rather, direct expenses are usually recorded. The gross profit is then determined once the required items are posted and the balancing figure has been calculated. If it appears on the debit side, it is profit. Else, loss.
A profit & loss account is the second account that is prepared among the final accounts. It is usually prepared to determine the net profit of the firm. Under this account, indirect expenses such as rent, salaries, discounts, interests, travelling expenses, etc are usually recorded. The profit/loss is determined the same way it is done for a trading account.
A balance sheet is an account that records the liabilities and assets of the firm. It is the last account that is prepared among the final accounts, to determine the accuracy of the accounts prepared. The debit and credit sides of the account must match to ensure that there are no errors in the accounts.
The Trading A/c, Profit & Loss A/c and Balance Sheet, for this question, have been attached below.
Answer:
gross profit=17,800
net profit=15,300
b/s total=32,300
Explanation: