A

PRESENTATION ON
TRADING ACCOUNT,
PROFIT AND LOSS
ACCOUNT AND
BALANCE SHEET
 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.
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)
 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.
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
 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
 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.
 PERFORMA OF BALANCE SHEET

Previous Liabilities Curr. Previous Assets Curr.

year Year year year

Share Capital FIXED ASSETS:

Authorised Capi tal 1. Goodwill
: 2. Land
… Shares of Rs. … 3. Building
each 4. Leaseholds
Issued Capi tal: 5. Railway Sidings
… Equity Shares of 6. Plant and Machinery
Rs.
7.Furniture and
…
Fittings
…Preference Share of
Rs. … each 8.Development of
Subscribed Capi Property
tal: 9.Patents, Trade
… Shares of Rs. Marks and Designs
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
unutilised money
R
raised by

issue P

L
1. Capital Reserve
U
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: Debts
LOANS
outstanding for a period
5. Fixed Deposits
exceeding 6 months
6.Loans and
Other Debts
Advances from
Less: Provision
subsidiaries
7. Short term
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 Subsidiaries
Companies (b) advances and
4.Unclaimed loans to partnership
Dividends Firms
5.Interest accrued but 9. Bills of Exchange
not due on loans 10.Advances
recoverable in cash
Previous Liabilities Curr. Previou Assets Curr.
year Year s year Year

6.Advance payments (4)

and unexpired MISCELLANEO
discounts for the US
portion for which EXPENDITURE
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
10.Provision for 3.Discount allowed on
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
5. Development
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 shares balance count not be
2.Liabilities under written off out of others
Guarantee 3.Arrears reserves)
of dividends on
cumulative
preference shares
4.Claim against the
company now
acknowledged as
debts
THANK
YOU