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प्रश्न
Explain the needs of a Trading Account.
Discuss the need of the Trading Account.
उत्तर
The need for a trading account is described below.
- Information on gross profit is provided. The trading concern's success can be determined by calculating the gross profit margin as a proportion of sales.
- A trader may compare his performance year over year by comparing his gross profit to sales ratio.
- Looking at the ratio of the cost of items sold to sale proceeds makes setting a fair price for the product easier.
- The direct expense-to-sales ratio can help prevent unnecessary spending on these items.
Notes
Students should refer to the answer according to their questions.
संबंधित प्रश्न
Answer in One Sentence:
What is a Trading A/c?
What are the objectives of preparing trading account?
From the following balances obtained from the books of Mr. Ganesh, prepare trading and profit and loss account.
| Particulars | ₹ | Particulars | ₹ |
| Stock on 01.01.2017 | 8,000 | Bad debts | 1,200 |
| Purchases for the year | 22,000 | Trade expenses | 1,200 |
| Sales for the year | 42,000 | Discount allowed | 600 |
| Expenses on purchases | 2,500 | Commission allowed | 1,100 |
| Financial charges paid | 3,500 | Selling expenses | 600 |
| Expenses on sale | 1,000 | Repairs on office vehicles | 600 |
Closing stock on December 31.12.2017 was ₹ 4,500
Closing stock appears in the Final Accounts in the ______.
Wages, carriage inward are recorded on the ______ side of the ______.
Purchases are recorded the ______ side of the ______.
Abraham is in business. The following balances were extracted from the books as on 31.12.2018. You are required to prepare a trading account and a profit and loss account for the year ended 31.12.2018 and a balance sheet as on that date.
| Debit (₹) | Credit(₹) | |
| Capital | 32,000 | |
| Drawings | 4,240 | |
| Purchases less Returns | 15,610 | |
| Rates and Taxes | 388 | |
| Salaries | 1,612 | |
| Lighting and Heating | 164 | |
| Electric Power | 384 | |
| Del credere Commission | 414 | |
| Insurance | 206 | |
| Advertising | 214 | |
| Sales less Returns | 34,176 | |
| Bad Debts Written off | 62 | |
| Postage, Telegrams, etc. | 826 | |
| Carriage | 754 | |
| Opening Stock | 6,160 | |
| Wages | 7,962 | |
| Land and Building | 15,840 | |
| Plant and Machinery | 4,034 | |
| Furniture and Fittings | 378 | |
| Sundry Debtors | 6,082 | |
| Sundry Creditors | 4,422 | |
| Cash at Bank | 5,268 | |
| 70,598 | 70,598 |
When preparing the accounts it is necessary to take the following matters into consideration: Closing stock on 31.12.2018 was ₹ 8,760.
The following is the trial balance of Mr. A. Chatterjee for the year ended 31st December, 2018. Compile the final accounts for him, after incorporating the adjustments and thereafter supply him with the required information, listed by him.
| Debit (₹) | Credit (₹) | |
| Opening Stock | 5,000 | |
| Capital | 30,000 | |
| Drawings | 2,000 | |
| Loan from Mr. Patel | 8,000 | |
| Purchases and Sales | 13,000 | 50,000 |
| Rejections Returned | 2,000 | 500 |
| Wages | 5,000 | |
| Salaries | 8,000 | |
| Carriage Outward | 2,000 | |
| Rent and Rates | 3,000 | |
| Telephone and Trunk Calls | 800 | |
| Petty Expenses | 400 | |
| Plant and Machinery | 35,000 | |
| Office Fixtures and Equipment | 10,000 | |
| Cash in Hand | 2,000 | |
| Bank Overdraft | 1,000 | |
| Customers and Suppliers | 8,000 | 6,700 |
| 96,200 | 96,200 |
Closing stock value is ₹ 15,000.
Trial Balance of Mr. J. Junior as on 31.3.2019:
| Debit (₹) | Credit (₹) | |
| Factory Power | 16,000 | |
| Carriage Charges | 2,500 | |
| Salaries | 20,400 | |
| Sales & Purchases of Goods | 1,40,000 | 2,67,000 |
| Machinery | 1,20,000 | |
| Discounts Received and Allowed | 5,000 | 6,000 |
| Wages (manufacturing activity) | 18,000 | |
| Stock | 25,000 | |
| Commission | 3,800 | |
| Insurance | 8,000 | |
| Loose Tools (Fixed Asset) | 11,000 | |
| Returns of Goods | 5,000 | 6,000 |
| Debtors & Creditors | 45,000 | 18,000 |
| Carriage on Sales | 6,000 | |
| Rent & Rates | 10,800 | |
| Bad Debts Written off & Recovered | 2,000 | 1,600 |
| Investments | 80,000 | |
| Bank Accounts | 22,000 | 10,000 |
| Drawings & Capital | 15,000 | 2,37,000 |
| Bills Payable & Receivable | 6,000 | 4,000 |
| Income from Investments | 6,800 | |
| Cash | 2,500 | |
| 5,60,200 | 5,60,200 |
Compile Final Accounts:
- An inventory of the godown on 31.3.2019 reflected stock value stated as ₹ 50,000.
The following balances were extracted from the books of Sri S. Kumar on 31st December 2018.
| Dr. (₹) | Cr. (₹) | |
| Capital | 24,500 | |
| Drawings | 2,000 | |
| General Expenses | 2,500 | |
| Building | 11,000 | |
| Machinery | 9,340 | |
| Opening Stock | 16,200 | |
| Power | 2,240 | |
| Taxes & Insurance | 1,315 | |
| Wages | 7,200 | |
| Sundry Debtors | 6,280 | |
| Sundry Creditors | 2,500 | |
| Charity | 105 | |
| Bad Debts | 550 | |
| Bank Overdraft | 11,180 | |
| Sales | 65,360 | |
| Purchases | 47,000 | |
| Scooter | 2,000 | |
| Bad Debt Provision | 900 | |
| Commission | 1,320 | |
| Trade Expenses | 1,780 | |
| Bills Payable | 3,850 | |
| Cash | 100 | |
| 1,09,610 | 1,09,610 |
Stock on 31st December 2018 was valued at ₹ 23,500.
Prepare Final Accounts for the year ended 31st December 2018.
