Question

state the reason for preparing trading account

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Answer 1

Explanation:

• The trading account is prepared to show the trading results of the business, e.g. gross profit earned or gross loss sustained by the business. It records the direct expenses of a business firm. According to J. R. Batlibboi, "The Trading Account shows the result of buying and selling goods.

Answer 2

Explanation:

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