PREPARATYION OF TRADING ACCOUNT

The trading account is prepared debiting the account with the opening stock first,followed by purchases less returns(ie:- return outwards) and direct expenses.(expenses directly connected with such purchases.)and crediting the same with sales less returns.(return inwards) followed by closing stock.The difference between the totals of the both of thje yrading account gives gross profit or gross loss. In case the credit side total of it is more than the debit side total,the difference is the 'gross profit'.On the other hand if debit side total of it is greater than that of the credit side, the difference is the 'gross loss'.