2. FORMAT OF PROFIT OR LOSS ACCOUNT
$ $
Sales Revenue (Sales
Revenue)
Less: Sales Returns (Sales Return)
Less: Cost of Sales (Cost of Sales)
Gross Profit (Sales Revenue-
Sales Returns-
Cost of Sales)
Add: Other Income
(Other Incomes) (Other Incomes)
(Sum of Other
Incomes)
(Gross profit +
Other income)
Less: Other Expense
(Other Expense) (Other Expense)
(Sum of Other
Expense)
Profit for the period (Gross profit +
Other income-
(Name of the business)
Income statement for the year ended (Date) (Trading)

3. EXAMPLE: BELOW SHOWS A TRIAL BALANCE
OF A BUSINESS. PREPARE A TRADING
ACCOUNT FOR THE BUSINESS
Trial Balance
As at 31 Oct 2012
Debit
$
Credit
$
Sales Revenue 446000
Sales Returns 30
Cost of Sales 2950
Discount Received 8000
Discount Allowed 4000
Rental Income 1500
Rental Expense 750
Commission Income 900
Salaries Expense 500
Interest Income 120

4. Utilities Expense 70
Service Income 500
Repair Expense 350
Cash in Hand 100000
Cash at Bank 336278
Inventory 6000
Trade Receivables 12092
Bank Loan 3000
Trade Payables 2000
Capital 1000
463020 463020

5. INSERT SALES REVENUE, SALES RETURN AND
COST OF SALES INTO THE RIGHT COLUMN AND
DEDUCT SALES RETURNS AND COST OF SALES
FROM SALES REVENUE
$ $
Sales Revenue 446000
Less: Sales Returns 30
Less: Cost of Sales 2950
Gross Profit 443020
(Name of the business)
Income statement for the year ended 31 October 2012 (Trading)

6. INSERT OTHER INCOME ON THE LEFT SIDE AND
CALCULATE THE TOTAL, PUTTING IT AT THE
RIGHT SIDE. ADD GROSS PROFIT AND OTHER
INCOME AND PUT IT AT THE RIGHT
$ $
Sales Revenue 446000
Less: Sales Returns 30
Less: Cost of Sales 2950
Gross Profit 443020
Add: Other Income
Discount Received 8000
Rental Income 1500
Commission Income 900
Interest Income 120
Service Income 500 11020
432000
(Name of the business)
Income statement for the year ended 31 October 2012 (Trading)

7. INSERT THE OTHER EXPENSE ON THE LEFT SIDE AND
CALCULATE THE TOTAL, PUTTING IT AT THE RIGHT SIDE.
ADD GROSS PROFIT AND OTHER INCOME THEN DEDUCT
OTHER EXPENSE AND PUT IT AT THE RIGHT
$ $
Sales Revenue 446000
Less: Sales Returns 30
Less: Cost of Sales 2950
Gross Profit 443020
Add: Other Income
Discount Received 8000
Rental Income 1500
Commission Income 900
Interest Income 120
Service Income 500 11020
432000
(Name of the business)
Income statement for the year ended 31 October 2012 (Trading)

8. Less: Other Expense
Discount Allowed 4000
Rental Expense 750
Salaries Expense 500
Utilities Expense 70
Repair Expense 350 5670
Profit for the period 426330