Income Statement (Trading Account section)

Trading account is a part of the financial statement, prepared by the entities to show the result of trading activities, i.e. purchase and sale of goods. On the other hand, profit & loss account is an account indicating the actual profit earned or loss sustained by the business during the accounting period.

Nominal accounts affect the profits of a business and so are closed and their balances transferred to the Income Statement (Trading and Profit and Loss Accounts) for the calculation of profits.

The Income Statement are known as Financial Statement (Final Accounts) as they are usually prepared at the end of the accounting period.

☺☺Those nominal accounts affecting the calculation of GROSS PROFIT are                  transferred to the TRADING ACCOUNT.

 ☺☺While nominal account affecting the calculation of NET PROFIT are transferred to the PROFIT AND LOSS ACCOUNT

SAMPLE FORMAT  ABC Sdn.Bhd
Income Statement
For the year ended _____________________ _______________________________________________________________________________
							RM	RM	RM
Sales									X
Less:	Discount Allowed								(X)
	Returns Inwards/ Sales Returns								(X)
Net Sales									X
Less:	Cost of Sales
	Opening Inventory							X
	Purchases						X
	Less:	Discount Received					(X)
		Returns Outwards/ Purchases Returns					(X)
	Net Purchases						X
	Carriage Inwards						X
	Custom Duties						X
	Wages for Packing goods						X
	Handling charges						X
	Cost of Purchases							X
	Cost of Goods Available for Sales							X
	Less:	Closing Inventory						(X)	(X)
Gross Profit/ Gross Loss									X