Question

Explain the nature of a Trading Account.

What is the nature of a Trading Account?

Answer 1

The following are the features of a Trading account:

1. It is a nominal account.
2. On the final day of the accounting year, it is prepared.
3. It stands for the first stage of a trader’s final accounts and the next stage of a manufacturer’s final accounts.
4. It only includes revenue-generating items. Not a single capital item if it’s included.
5. The opening stock balance is present for a trader. In the case of a manufacturer, it begins with the balance of the manufacturing account.
6. It only includes items related to the current year.