Page 63 - DMGT403_ACCOUNTING_FOR_MANAGERS

Accounting for Managers

Notes Trading account

Trading account is the comparison of sales and purchase. This account is prepared to determine the
amount of gross profit or gross loss on sales. The proforma of Trading Account is given below:
Pro forma of Trading Account
In the Books of …………….
Trading Account
(for the year ending …………….)

Particulars Dr. Particulars Cr.
Amount Amount
( ) ( )
To Opening Stock ------- By Sales ---------
To Purchases --------- Less: Returns ---------- -------
Less: Returns --------- ------- By Closing stock -------
To Wages & Salaries ------ By Gross Loss (if any)
To Carriage Inwards ------- Transferred to P/L A/c -------
To Cartage ------
To Freight -------
To Light Power & Heating in factory
To Factory Insurance ------
To Works Manager’s Salary -------
To Foreman’s Salary ------
To Factory Rent & Taxes -------
To Motive Power ------
To Factory Repairs -------
To Factory Expenses ------
To Octroi duty -------
To Custom Duty ------
To Manufacturing Exps. -------
To Consumable Stores ------
To Gross Profit -------
Transferred to P/L A/c. ------
------ -------

Notes

There is no particular proforma of the Trading Account. The above proforma given is
traditional one. That is not as per law. Here the students are advised to follow this proforma.
If the total of credit side is more than the total of debit side, difference is called gross
profit or vice versa gross loss.

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