Question:
Why is Trading Account prepared? Name any two items that are transferred to the credit of Trading Account.
Why is Trading Account prepared? Name any two items that are transferred to the credit of Trading Account.
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The Trading Account focuses on direct transactions, like purchases and sales, to ascer tain Gross Profit or Loss.
Updated On: Dec 18, 2024
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Solution and Explanation
The Trading Account is prepared to determine the Gross Profit or Gross Loss of a business during an accounting period. It records direct incomes and direct expenses related to the core business operations.
Two items transferred to the credit of Trading Account:
1. Sales (Net Sales).
2. Closing Stock
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