Question

Which of the following are true for a Trading Account?

1. This account contains personal and real accounts only.
2. This account contains opening balance of stock on the debit side.
3. It is prepared after the Profit and Loss Account.
4. The result of this account is the Gross Profit or the Gross Loss.

Options

• I and II are true.

• II and III are true.

• III and IV are true.

• II and IV are true.

Answer 1

II and IV are true.

Explanation:

A Trading Account is prepared to determine the Gross Profit or Gross Loss of a business. It includes the opening stock balance on the debit side, along with purchases and direct expenses. It is prepared before the Profit and Loss Account and contains only nominal accounts, not personal or real accounts. Thus, statements (II) and (IV) are true.