S. No.
Trading A/c Profit And Loss A/c
The trading account gives
1) information
related to trading activities.
You can calculate gross profit and
2) loss for the period.
The Trading account balance is
3) transferred to the profit and loss
account.
You can get a summary of all
4) direct revenue and direct
expenses.
It is prepared before the Profit &
5) Loss account.
The trading account is
6) independent of the trial balance as
it is the final statement.
All the expenses related to goods
7) sold, sales and other direct
expenses are accounted in the
trading account.
With trading account, you can
8) discover various possible
activities to increase profitability.
You can compare trading account
of consecutive period to identify
these steps.
Records receipts and payments
9) done in cash and cheques only.
The trading account balance
10) indicates cash in hands or cash at
the bank.
It does not start with balance of
11) any
account.
Formula: Gross profit % = Gross
12)
In Profit and Loss account you can
determine the profit made by your
business and loss sustained by the
same.
You can calculate net profit and
loss for a given period.
The Profit and Loss account
balance is transferred to capital
account in the
balance sheet.
Profit & Loss account gives
summary of all operating and
non-operating incomes and
expenses.
Profit & Loss account is prepared
after the trading account.
Profit and Loss account is
dependent on the trading account.
In Profit and Loss account all the
indirect expenses such as
administrative cost, selling costs
are accounted against gross profit
and other incomes generated.
With Profit and Loss account you
can
determine steps to be taken for
betterment of the overall business.
You can compare net results of
consecutive period to identify these
steps.
Records incomes and gains related
to the current year only.
The profit and loss account balance
indicates surplus or deficit.
It always starts with the balance of
the trading account.
Formula: Net profit = Gross profit –
profit / Net sales. Expenses + Other income.