BUSINESS ADMINISTRATION
FINANCIAL ACCOUNTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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no
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yes
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Detailed explanation-1: -The trading account gives information related to profit earned or loss through various trading activities. Whereas the profit and loss, account determine the net profit or loss for the period. Trading and P&l accounts are used to calculate the gross profit and net profit of the organization.
Detailed explanation-2: -It begins with an entry for revenue, known as the top line, and subtracts the costs of doing business, including the cost of goods sold, operating expenses, tax expenses, and interest expenses. The difference, known as the bottom line, is net income, also referred to as profit or earnings.
Detailed explanation-3: -Revenue or sales: This is the first section on the income statement, and it gives you a summary of gross sales made by the company. Revenue can be classified into two types: operating and non-operating.
Detailed explanation-4: -This account is mainly prepared to understand the profit earned by the business on the purchase of goods. Items that are seen in the debit side include purchases, opening stock and direct expenses while credit side includes closing stock and sales. Closing entries for Gross Loss or Gross Profit.