GCEFinancial AccountingFinal Accounts of Sole Traders2022

Which of the following best describes the purpose of a Trading Account?

ATo ascertain the net profit or net loss of a business
BTo ascertain the gross profit or gross loss of a businessCORRECT
CTo show the financial position of a business at a given date
DTo record all cash receipts and payments of a business
AI
Toaster Teacher
Why the answer is B, and why the others tempt you.
The Trading Account is prepared to determine the gross profit or gross loss of a business by comparing the cost of goods sold with the net sales revenue. The net profit or net loss is determined in the Profit and Loss Account, while the financial position is shown in the Balance Sheet.
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