Column 1: This column represents the figures for the different items in the trading account, such as sales, sales returns, opening inventory, purchases, returns inwards, carriage inwards, and closing inventory. These figures are used to calculate the turnover and the cost of goods sold.
Column 2: This column is used for entering the amounts of the different items related to purchases and cost of goods sold, such as returns outwards, carriage inwards, and closing inventory. These figures are subtracted from the figures in column 1 to calculate the cost of goods sold.
Column 3: This column is used for summarizing the calculations made in columns 1 and 2. The figures in column 3 are used to calculate the gross profit or loss for the trading period. This column provides a clear indication of the financial performance of the business in terms of the sales revenue generated and the cost of goods sold.
Trading Account for the Period . ....
£ £ £
Column 1 Column 2 Column 3
Sales XXXX
less Sales returns (Returns inwards) XXXX
Turnover XXXX
Cost of goods sold:
Opening inventory XXXX
Purchases XXXX
less Returns (returns outwards) XXXX
XXXX
add Carriage inwards XXXX XXXX
XXXX
less Closing inventory XXXX XXXX
Gross Profit/(Loss) XXXX
Gross profit may be defined as "the excess of the selling price of goods over their costs
price, due allowance being made for opening and closing stocks, and for the costs incidental
in getting the goods into their present condition and location".
1. At the top of the table above the columns are given as column1, column2, and column3, step by step explain in detail the use of each column in the table given above
1 answer
1 answer