c) Charges directly related to the cost of the goods purchased. For
example: Freight, Duty, Clearing Charges, Dock Dues, and Carriage.
Inwards, Cartage etc.,
10.5. The following are to be considered on the credit side of the Trading Account:
a) Sale of goods minus goods returned.
b) Closing stock
10.6. The credit balance on the Trading Account i.e., excess of credit over debit
shows gross profit. This gross profit will be shown on the debit side of the
Trading Account to balance the account. The gross profit will be carried
forward to credit side of the Profit and Loss Account.
- Activities to be carried out at the end of the Accounting Year
Ê Valuation of Closing Stock
Ê Valuation of work-in-progress
Ê List of bad-debts for approval of the Board to write-off
Ê If there is any indefiniteness regarding recovery of debts, give specific reasons
and classify it as doubtful debts and make provision for it
Ê Write off the depreciation on various assets
Ê Account of outstanding liabilities
Ê Apportion payments made in advance
Ê Account income accrued and not received
Ê Adjustment or apportionment of income received in advance
Ê Make provision for discounts to be allowed to debtors.
Ê Make provision for discounts to be received from the creditors
Ê Calculate interest and account for the same on capital and drawings.
