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ITFT- Accounting
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ITFT- Accounting

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Trading & p&l A/C and Balance Sheet

Trading & p&l A/C and Balance Sheet

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  • 1. TRADING P&L A/C AND BALANCE SHEET
  • 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. • 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. 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. Balance Sheet • Balance sheet shows the value of a business’s assets and liabilities on a particular date.
  • 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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