Question

why we prepare trending account​

Answer 1

Answer:

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Trading account shows the gross profit or gross loss during an accounting year. Its main components are sales, services rendered in the credit side of such sales or services rendered in the debit side. The Trading Account is prepared to know the gross profit or gross loss during the accounting period.

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Answer 2

Answer:

This account is necessary because of the following advantages. Gross profit of a business is very important data, since all business expenses are met out of it. So the amount of gross profit should be adequate to meet the indirect expenses of a business concern.

Explanation:

Trading account shows the gross profit or gross loss during an accounting year. Its main components are sales, services rendered in the credit side of such sales or services rendered in the debit side. The Trading Account is prepared to know the gross profit or gross loss during the accounting period.