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Dear Teachers,

​

These slides have been prepared based on the NCERT syllabus to support you in teaching Plus One and Plus Two Accountancy and Computerised Accounting.

​

Please review and verify the content before using it in your classrooms. If you find any errors or have feedback, please let me know.

​

Mujeeb Rahiman C

HSST Commerce

GHSS Pattikkad

Malappuram Dt.

​

✉️ mujeebchemmala@gmail.com

9995983075 �

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Chapter 8

Financial Statements I

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Prepared to present a true and fair view of the financial performance of the business

(Profit / Loss)

Trading and Profit & Loss Account

(Income Statement)

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Trading Account and Profit & Loss Account

Amt.

Particulars

Amt.

Particulars

Trading And Profit & Loss Account

For the year ended March 31, 2020

207800

Gross Profit c/d

Gross Profit b/d

13000

Purchases

80000

Less P.Return

1500

78500

Sales

190000

Less S.Return

3000

187000

Opening Stock

Closing Stock

20800

Carriage inwards

3400

Wages

12000

207800

100900

100900

Rent

16800

Salaries

24000

Office Expenses

1200

Discount

700

Commission Rcvd.

800

101700

101700

Net Profit

(transferred to capital A/c)

59000

Trading Account

Profit & Loss Account

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Closing Entries

The preparation of trading and profit and loss account requires that the balances of accounts of all concerned items are transferred to it for its compilation.

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Closing Entries

Amt.

Particulars

Amt.

Particulars

Trading And Profit & Loss Account

For the year ended March 31, 2020

207800

Gross Profit c/d

Gross Profit b/d

13000

Purchases

80000

Less P.Return

1500

78500

Sales

190000

Less S.Return

3000

187000

Opening Stock

Closing Stock

20800

Carriage inwards

3400

Wages

12000

207800

100900

100900

Rent

16800

Salaries

24000

Office Expenses

1200

Discount

700

Commission Rcvd.

800

101700

101700

Net Profit

(transferred to capital A/c)

59000

Trading A/c Dr.

To Opening stock A/c

To Purchases A/c

To Carriage inwards A/c

To Wages A/c

To All other direct expenses A/c

Purchases return A/c Dr.

To Purchases A/c

Sales A/c Dr.

To Sales return A/c

Sales A/c Dr.

To Trading A/c

Closing Stock A/c Dr.

To Trading A/c

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Closing Entries

Amt.

Particulars

Amt.

Particulars

Trading And Profit & Loss Account

For the year ended March 31, 2020

207800

Gross Profit c/d

Gross Profit b/d

13000

Purchases

80000

Less P.Return

1500

78500

Sales

190000

Less S.Return

3000

187000

Opening Stock

Closing Stock

20800

Carriage inwards

3400

Wages

12000

207800

100900

100900

Rent

16800

Salaries

24000

Office Expenses

1200

Discount

700

Commission Rcvd.

800

101700

101700

Net Profit

(transferred to capital A/c)

59000

Profit and Loss A/c Dr.

To Rent A/c

To Salaries A/c

To Officer Expenses A/c

To Discount A/c

To Losses (individually) A/c

Commission Received Dr.

Incomes (individually) A/c Dr.

Gains (individually) A/c Dr.

To Profit and Loss A/c

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Closing Entries

Amt.

Particulars

Amt.

Particulars

Trading And Profit & Loss Account

For the year ended March 31, 2020

207800

Gross Profit c/d

Gross Profit b/d

13000

Purchases

80000

Less P.Return

1500

78500

Sales

190000

Less S.Return

3000

187000

Opening Stock

Closing Stock

20800

Carriage inwards

3400

Wages

12000

207800

100900

100900

Rent

16800

Salaries

24000

Office Expenses

1200

Discount

700

Commission Rcvd.

800

101700

101700

Net Profit

(transferred to capital A/c)

59000

For transfer of net profit

Profit and Loss A/c Dr.

To Capital A/c

For transfer of net loss

Capital A/c Dr.

To Profit and Loss A/c

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Trading Account is a nominal account prepared to ascertain the profit or loss arising from the trading activities of the business. (Manufacturing, buying and selling)

If the amount of sales (Direct Income) exceeds the amount of purchase and expenses directly connected with purchase (Direct expenses), the difference is termed as Gross profit.

If the purchases and direct expenses exceed the amount of sales, the difference is termed as Gross loss.

Trading Account

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Direct Expenses

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All expenses incurred in purchasing the goods, bringing them to the godown and manufacture of goods are called Direct Expenses.

​

Direct Income

​

Direct income is one which is earned directly by way of business activities

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Proforma of a Trading Account

Amt.

Particulars

Amt.

Particulars

Trading Account for the year ended ...........

Opening Stock

XXX

Purchases XXXX

Less P.Returns XX

XXX

Wages

XXX

Carriage Inwards

XXX

Fuel, Factory Rent etc..

XXX

Import Duty

XXX

Clearing Charges

XXX

Other manufacturing exp.

XXX

Sales XXXX

Less S.Return XX

XXX

Closing Stock

XXX

XXXX

XXXX

Gross Profit c/d

XXX

Gross Loss c/d

XXX

Cash Purchases + Credit Purchases

Cash Sales + Credit Sales

Raw materials

Finished goods

Semi finished goods

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MUJEEB RAHIMAN C

HSST COMMERCE

GHSS PATTIKKAD

MALAPPURAM DT

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From the following information, prepare a trading account for the year ending March 31, 2020. Rs.

Opening stock 60,000

Purchases 3,00,000

Purchases return 18,000

Sales 7,50,000

Sales return 30,000

Wages 12,000

Factory rent 18,000

Office rent 10,000

Clearing charges 48,000

Carriage on purchases 6,500

Carriage on sales 5,000

Gas and Water 10,000

Closing stock is valued at Rs. 15,000

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Amt.

Particulars

Amt.

Particulars

Trading Account for the year ended March 31, 2020

Opening Stock

60,000

Purchases 3,00,000

Less P.Returns 18,000

2,82,000

Opening stock 60,000

Purchases 3,00,000

Purchases return 18,000

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Amt.

Particulars

Amt.

Particulars

Trading Account for the year ended March 31, 2020

Opening Stock

60,000

Purchases 3,00,000

Less P.Returns 18,000

2,82,000

Wages

12,000

Sales 7,50,000

Less S.Return 30,000

7,20,000

Sales 7,50,000

Sales return 30,000

Wages 12,000

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Amt.

Particulars

Amt.

Particulars

Trading Account for the year ended March 31, 2020

Opening Stock

60,000

Purchases 3,00,000

Less P.Returns 18,000

2,82,000

Wages

12,000

Factory Rent

18,000

Clearing Charges

48,000

Sales 7,50,000

Less S.Return 30,000

7,20,000

Factory rent 18,000

Office rent 10,000

Clearing charges 48,000

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Amt.

Particulars

Amt.

Particulars

Trading Account for the year ended March 31, 2020

Opening Stock

60,000

Purchases 3,00,000

Less P.Returns 18,000

2,82,000

Wages

12,000

Factory Rent

18,000

Clearing Charges

48,000

Carriage on purchase

6,500

Sales 7,50,000

Less S.Return 30,000

7,20,000

Carriage on purchases 6,500

Carriage on sales 5,000

​

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Amt.

Particulars

Amt.

Particulars

Trading Account for the year ended March 31, 2020

Opening Stock

60,000

Purchases 3,00,000

Less P.Returns 18,000

2,82,000

Wages

12,000

Factory Rent

18,000

Clearing Charges

48,000

Carriage on purchase

6,500

Gas and Water

10,000

Sales 7,50,000

Less S.Return 30,000

7,20,000

Closing Stock

15,000

Gas and Water 10,000

Closing stock is valued at Rs. 15,000

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Amt.

Particulars

Amt.

Particulars

Trading Account for the year ended March 31, 2020

Opening Stock

60,000

Purchases 3,00,000

Less P.Returns 18,000

2,82,000

Wages

12,000

Factory Rent

18,000

Clearing Charges

48,000

Carriage on purchase

6,500

Gas and Water

10,000

Sales 7,50,000

Less S.Return 30,000

7,20,000

Closing Stock

15,000

7,35,000

7,35,000

Gross Profit

2,98,500

4,36,500

7,35,000

7,35,000 – 4,36,500

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MUJEEB RAHIMAN C

HSST COMMERCE

GHSS PATTIKKAD

MALAPPURAM DT

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Amt.

Particulars

Amt.

Particulars

Trading Account for the year ended March 31, 2020

Opening Stock

60,000

Purchases 3,00,000

Less P.Returns 18,000

2,82,000

Wages

12,000

Factory Rent

18,000

Clearing Charges

48,000

Carriage on purchase

6,500

Gas and Water

10,000

Sales 7,50,000

Less S.Return 30,000

7,20,000

Closing Stock

15,000

7,35,000

7,35,000

Gross Profit

2,98,500

Net Sales

- Cost of goods sold

Gross Profit =

= 60,000 + 2,82,000 + 94,500) – 15,000

Cost of goods sold = (Opening Stock + Net Purchases + Direct Expenses) – Closing Stock

= 4,21,500

- 4,21,500

Gross Profit =

7,20,000

= 2,98,500

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Illustration

Compute cost of goods sold and gross profit for the year 2017 with the help of the following information and prepare trading account

Sales 20,00,000

Purchases 15,00,000

Wages 1,00,000

Stock (Apr. 01, 2016) 3,00,000

Stock (March 31, 2017) 4,00,000

Freight inwards 1,00,000

​

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Gross Profit = Net Sales - Cost of goods sold

Cost of goods sold = (Opening Stock + Net Purchases + Direct Expenses) – Closing Stock

Sales 20,00,000

Purchases 15,00,000

Wages 1,00,000

Stock (Apr. 01, 2016) 3,00,000

Stock (March 31, 2017) 4,00,000

Freight inwards 1,00,000

= (3,00,000 + 15,00,000 + 1,00,000 + 1,00,000) – 4,00,000

= 20,00,000 – 4,00,000 = 16,00,000

Gross Profit = 20,00,000 – 16,00,000 = 4,00,000

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Amt.

Particulars

Amt.

Particulars

Trading Account for the year ended March 31, 2017

Opening Stock

3,00,000

Purchases

15,00,000

Wages

1,00,000

Freight inwards

1,00,000

Sales

20,00,000

Closing Stock

4,00,000

24,00,000

24,00,000

Gross Profit

4,00,000

Sales 20,00,000

Purchases 15,00,000

Wages 1,00,000

Stock (Apr. 01, 2016) 3,00,000

Stock (March 31, 2017) 4,00,000

Freight inwards 1,00,000

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MUJEEB RAHIMAN C

HSST COMMERCE

GHSS PATTIKKAD

MALAPPURAM DT