Subject: Accountancy
The trading account contains the items relating to stock, purchases, sales, direct expenses and manufacturing expenses. Trading account is prepared in the form of ledger. Hence, it contains debit and credit sides. The items included in the trading account are as follows: -
The trading account is prepared by following certain procedures. It is prepared in the form of the ledger and hence it contains two sides: Debit and Credit. While placing the items in the trading account, opening stock, purchases, purchase related expenses, direct expenses and factory or manufacturing expenses are debited and closing stock and sales revenue are credited. The procedures of preparing the trading account can be explained as follows: -
Explain the items included in the debit side of trading account.
The following are the items included in debit side of trading account:
Explain the items included in credit side of trading account.
The following are the items included in credit side of trading account:
What are factory or manufacturing expenses?
The expenses, which are incurred inside the factory for the production of the goods, are known as factory or manufacturing expenses. Factory rent, motive power, gas, fuel, wages, and royalties are some of the examples of manufacturing or factory expenses.
Explain the procedures of preparing trading account.
The trading account is prepared by following certain procedures. It is prepared in the form of the ledger and hence it contains two sides: Debit and Credit. While placing the items in the trading account, opening stock, purchases, purchase related expenses, direct expenses and factory or manufacturing expenses are debited and closing stock and sales revenue are credited. The procedures of preparing the trading account can be explained as follows: -
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