Trading Account
Definition
The first part of the final accounts prepared to ascertain the Gross Profit or Gross Loss from trading (buying and selling) activities during an accounting period. It includes opening stock, purchases, direct expenses, sales, and closing stock.
Example
"A trading firm prepares its Trading Account to find that Net Sales ₹5,00,000 minus Cost of Goods Sold ₹3,50,000 yields a Gross Profit of ₹1,50,000."