You cannot deny the importance of trading account in accounting and to be more precise in preparing final account statement. Final account statement which is prepared by every business at the end of accounting year basically consists of 3 steps listed as:
At the end of every year, final account statement is prepared to know exactly that where the business stands i.e. if business is generating revenues or else is incurring loss. Preparation of final account begins with the first step which includes trading account. Trading account shows the gross profit or gross loss at the end of fiscal year from trading activities in any business. In this case need of trading account homework, answers arise, and you can get a complete idea.
When you will talk from investmentâ€™s point of view, then also trading account playscrucialrole. Trading account is also same as widely used bank accounts, which is used to hold money and securities and is directed by investment dealer.
Earlier it was believed that the trading account only holds stock, however a trading account can also hold money, foreign money, securities and different type of investments. Because of this reason people, as well as organizations, open trading account to perform trade activities including purchasing and selling of financial tools like stocks, derivatives, commodities, etc.
It is important her to mention that investors can open multiple accounts as per their requirements and for opening a trading account, investors either can prefer opening it online or else can also go for brokerage firm.
What is the need of preparing trading account?
As from the discussion it is clear that trading account only provides information about gross profit or gross loss instead of net profit or net loss, which is later determined in profit and loss account statement.
So, here the question arises that if trading account doesnâ€™t give information about net profit or net loss, then what is the significance of trading account in final account statement? Why should you prepare trading account?
To clear your doubt here, I am illustrating some crucial points which will make you understand the advantages of trading account in final account statement. Letâ€™s have a look.
Net sales = Gross sales â€“ sales return
Henceforth, with these points, it is easy to understand the benefits of preparing trading account so far. Businesses prepare trading account to know what will be the future of their business, whether it is going to be successful or not.
Obstacles faced in need of trading account homework answersÂ
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