At the end of a financial period, all expense and revenue accounts are closed to a summarizing account usually called a Profit and Loss Account. These account the money in (revenue) and out (costs) of the business as a result of the business' 'trading' i.e.
This begins with the Gross Profit and adds to it any additional costs and revenues, as well as overheads. A Trading account is a declaration prepared by a firm to determine its trading results for the accounting year. On January 1, 2012, the organizers of the Parsons Corporation contained their charter and issued 10,000 shares of $1 par common stock for $4 per share.
This is the financial statement that summarizes revenues and expenses for a specific period of time, usually a month or a year.


It shows financial the activity of a business during that period and indicates any profit or loss earned. These additional costs and revenues may be in the nature of additional operating, administrative, selling and distribution expenses.A  This account also comprises expenses which are as of any other actions not directly related to trading (non-operating). This is divided in a Trading Account which calculates the Gross Profit for the period, and a Profit and Loss Account which calculates Net profit for the period. In the trading account the cost of goods sold is subtracted from Net Sales for the period to calculate Gross Profit.
This may be buying raw materials and selling refined goods; it might be buying goods wholesale and selling them retail. It takes into account a variety of trading everyday expenditure (regularly all direct expenses) and incomes.


In terms of a developed concern, it will organize an additional statement called a manufacturing account. A manufacturing account is arranged by a producer to ascertain the cost of goods manufactured through the existing accounting year.



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