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Trading Account
|
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Profit and Loss Account
|
|
1 |
It is the
first stage of final accounts. |
1 |
It is the second stage
of the final accounts. |
|
2 |
It shows the gross
result (gross profit or gross loss) of
the business. |
2 |
It shows the net results (net profit
or net loss) of the business. |
|
3 |
All direct expenses
(expenses connected with purchase or
production of goods) are considered in
it. |
3 |
All expenses connected with sales
and administration (indirect expenses)
of business are considered. |
|
4 |
It does not start with
the balance of any account. |
4 |
It always starts with the balance of
a trading account (gross profit or gross
loss). |
|
5 |
Its balance (G.P or G.L)
is transferred to profit and loss
account. |
5 |
Its balance (N.P or N.L) is
transferred to capital account in
balance sheet. |
