Question

On the basis of the information given, identify the account.

1. It contains items of revenue nature only.
2. It is prepared to ascertain the Gross profit or the Gross loss.

Options

• Trading account

• Purchase account

• Sales account

• Profit and Loss account

Answer 1

Trading account

Explanation:

A Trading Account contains only revenue (direct) items and is prepared to ascertain gross profit or gross loss for the period; it’s the first-stage final account, recording cost of goods sold and direct expenses against sales.