What is Trading And Profit And Loss Account - Definition -T& P&L Example Format - Formulas
What is Tradi ng Account? The Tradi ng Account is the part of Cost of Goods Sold Statement i.e., it is related to finished goods or completed goods which have been manufactured in a industry. It is prepared to calculate Gross Profit or Gross Loss for the accounting period. It is a type of Ledger where Direct Revenues such as Sales on Credit Side and Direct Expenses such as Purchases on Debit Side are recorded. It is not prepared for Services Companies as it is related to goods or products. If the Credit Side is greater than Debit side, then there is Gross Profit but if the Debit Side exceeds the Credit Side, then there is Gross Loss. In the calculation of Gross Profit, the Closing Stock or Ending Inventory is valued at the cost which includes those goods unsold at the end of the accounting period and it must be offset with the revenue of tha t particular period according to Matching Principle Gaap as the all the cost incurred in earning