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Trading Account

Trading Account The purpose of this account is to find out if the business made a gross profit or gross loss while trading
Trading Period Refers to the year the accounts are made for
Gross Profit This is the difference between sales and the cost of actual sales, if sales are greater than the cost of sales
Gross Loss This is the difference between sales and the cost of actual sales, if the sales are less than the cost of sales
Net Sales True value of sales, i.e. sales less sales returns
Net Purchases True value of purchases, i.e. purchases less purchases returns
Sales The goods sold by the business
Purchases The goods bought by the business, which they intend to sell
Sales Returns The goods that were returned to the business, sometimes known as returns inwards
Purchases Returns The goods returned by the business to its suppliers, also known as returns outwards
Customs Duty The tax or duty paid on goods imported from non-EU countries, also known as import duty
Import Duty Another name for Customs Duty
Carriage Inwards The cost of collection of goods purchased from the supplier
Cost of Sales The figure subtracted from net sales to get Gross Profit (or Loss)
Opening Stock The stock left over from the previous years' trading, is known as this at the start of the next trading period
Closing Stock The stock left at the end of the Trading Period. This figure is calculated by stock-taking.