ITFT- Accounting

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Trading & p&l A/C and Balance Sheet

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ITFT- Accounting

  1. 1. TRADING P&L A/C AND BALANCE SHEET
  2. 2. Trading Account • The trading account reveals the gross profit of the business. • Gross profit is the difference between sales revenue and the direct cost of the goods sold.
  3. 3. • Cost of goods sold is the cost of purchasing the goods from suppliers (in case of retailing business) or the cost of producing the goods that are sold.
  4. 4. Profit and loss account • This account shows the net profit of the business. • Net profit = (Gross Profit – Expenses and Overheads) + Income from non trading activities
  5. 5. Balance Sheet • Balance sheet shows the value of a business’s assets and liabilities on a particular date.
  6. 6. • It records what the firm owns (assets), what it owes (liabilities), what it is owed and how it is financed (owner’s equity).

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