Trading and Profit and Loss Account

The account which discloses the gross profit or loss

is called the

• Profit and Loss A/c

• Appropriation A/c

• Trading A/c

• Cash A/c

In the trading account, returns outwards is deducted

from

• Carriage outwards

• Carriage inwards

• Purchases

• Sales

Carriage inwards is charged to the Trading Account because:

• it is not not a balance sheet item

• it is not part of our motor expenses

• return inwards also goes in the trading account

• it is basically part of the cost of buying goods

Net Profit is

• Sales less puchases add opening stock less closing stock

• Gross profit add expenses of the period

• Capital plus all expenses

• Gross profit less expenses of the period

The gross profit of a firm is $3 600, bad debts $100,

rent paid $120, rent prepaid $20, general expenses

$80 and discount received $110. The net profit is

• $3 400

• $3 410

• $3 430

• $3 710