1. A
PRESENTATION ON
TRADING ACCOUNT,
PROFIT AND LOSS ACCOUNT
AND
BALANCE SHEET
2. TRADING ACCOUNT
A Trading Account is a financial statement
prepared to know the gross profit or gross loss
earned from the purchase and sales of goods.
It includes all expenses incurred on
manufacturing of goods on debit side and sales
of goods and closing stock on credit side.
Excess of credit side over debit side is called
gross profit and excess of debit side over credit
side is called gross loss.
3. Performa of trading account
Particulars Amount Particulars Amount
(dr.) (cr.)
To opening stock ___ By sales ___
To purchases ___ Less: returns ___
Less: returns outward ___ By closing stock ___
To wages ___ By profit and loss ___
To carriage inward ___ account _________
To freight ___ (gross loss c/d ) ___
To manufacturing ___ _________
expenses ___
To power ___
To coal, gas and water ___
To factory lightning ___
To octroi ___
To customs duty ___
To dock charges ___
To royalty ___
To factory rent and ___
rates _________
To profit and loss __
(gross profit c/d) _________
4. PROFIT AND LOSS ACCOUNT
Profit and loss account is prepared to
ascertain the net profit or loss.
All incomes are recorded on credit side
while all expenses are recorded on the
debit side.
If credit side is more than the debit side
the difference is net profit and vice-versa.
5. Performa of profit and loss account
Particulars Am.(dr Particulars Am.(cr.)
To trading a/c(gross ___ By trading a/c (gross ___
loss) ___ profit) ___
To salaries and wages ___ By discount received ___
To rent and rates ___ By interest received ___
To printing and ___ By interest on ___
stationary ___ drawings ___
To general expenses ___ By commission ___
To telephone expenses ___ received ___
To legal expenses ___ By bad debts ___
To postage ___ recovered
To audit fees ___ By dividend on
To direct fees ___ shares
To carriage outward ___ By profit and sale of
To bad debts ___ assets
To commission ___ By net loss
To depreciation ___ transferred to capital
To discount account
To repairs and renewals
6. Cont…
Particulars Am.(dr.) Particulars Am.(cr.)
To interest on loans ___ _______
To interest on capital ___ _______
To insurance ___
To export duty ___
To sales tax ___
To trading expenses ___
To loss due to fire ___
To profit transferred to _______
capital a/c _______
7. BALANCE SHEET
A statement which is prepared to know the
financial position of the business on a certain
date is known as balance sheet.
It is prepared on the last date of the accounting
year.
Assets are recorded on the right hand side and
capital and liabilities on the left hand side.
“To” and “By” are not used in balance sheet.
8. PERFORMA OF BALANCE SHEET
Previous Liabilities Curr. Previous Assets Curr.
year Year year year
Share Capital FIXED ASSETS:
Authorised Capital : 1. Goodwill
… Shares of Rs. … 2. Land
each 3. Building
Issued Capital: 4. Leaseholds
… Equity Shares of Rs. 5. Railway Sidings
… 6. Plant and Machinery
…Preference Share of 7. Furniture and
Rs. … each
Fittings
Subscribed Capital:
8. Development of
… Shares of Rs.
Property
… each Rs. … Called
9. Patents, Trade
up
Marks and Designs
9. Previous Curr. Previous Assets Curr.
Liabilities
year Year year Year
Less Calls Unpaid 10. Live Stocks
By directors 11. Vehicles etc.
By Others INVESTMENTS:
Add Forfeited shares 1.In govt. securities
(2) RESERVES 2.In shares, bonds,
debentures A
3.In immovable N
properties D
4.In the capital of
S
partnership firm
U
5. Balance of R
unutilised P
money raised by L
issue U
S
:
1.Capital Reserve
10. Previous Liabilities Curr. Previous Assets Curr.
year Year year year
LOANS: CURRENT ASSETS,
SECURED LOANS LOANS AND
1.Debentures ADVANCES:
2. Loans and Current Assets:
Advances from 1. Interest accrued on
Banks. investments
3. Loans and 2. Stores and Spare
Advances from parts
subsidiaries 3. Loose Tools
4. Other Loans and 4. Stock in trade
Advances
5. Work in progress
UNSECURED
6. Sundry Debtors:
LOANS
Debts outstanding for a
1. Fixed Deposits
period exceeding 6
2. Loans and
months
Advances from
Other Debts
subsidiaries
Less: Provision
3. Short term loans
11. Previous Liabilities Curr. Previou Assets Curr.
year Year s year Year
4. Other Loans and 7. Cash balance in
AdvancesFrom hand
BanksFrom Others Bank balance:
CURRENT With scheduled
LIABILITIES AND Banks
PROVISIONS With others
Current Liabilities: Loans and
1. Acceptances Advances:
2. Sundry Creditors 8. (a.)Advances and
3. Subsidiary loans to
Companies Subsidiaries
4. Unclaimed (b) advances and
Dividends loans to partnership
5. Interest accrued Firms
but not due on loans 9. Bills of Exchange
10. Advances
recoverable in cash
12. Previous Liabilities Curr. Previou Assets Curr.
year Year s year Year
6. Advance (4)
payments and MISCELLANEO
unexpired discounts US
for the portion for EXPENDITURE
which value has still :
to be given 1.Preliminary Expenses
7. Other Liabilities 2. Expenses, including
(B) Provisions: commission or
8. Proposed Brokerage on under
Dividends
writing of Shares or
9. Provision for
Debentures
Taxation
3. Discount allowed on
10. Provision for
Contingencies the issue of Shares or
11. Provision for Debentures
Provident Fund 4. Interest paid out of
schemes capital during
12. Provision for construction period
insurance, pension
13. Previous Liabilities Curr. Previou Assets Curr.
year Year s year Year
CONTINGENT PROFIT & LOSS
LIABILITIES ACCOUNT: (This is
1.Uncalled liabilities shown only when its debit
on partly paid balance count not be
shares written off out of others
2.Liabilities under reserves)
Guarantee
3.Arrears of
dividends on
cumulative
preference shares
4.Claim against the
company now
acknowledged as
debts