CDA COLLEGECDA COLLEGE

ACC101: BOOK KEEPING 1ACC101: BOOK KEEPING 1

Lecture 3Lecture 3

Lecturer: Kleanthis Zisimos Lecturer: Kleanthis Zisimos

Chapter ReviewChapter Review

In Today’s Lecture weIn Today’s Lecture we

Review exercises of last lectureReview exercises of last lecture Analyze the Trading accountAnalyze the Trading account Examine Sales, Purchases, stock, Examine Sales, Purchases, stock,

Carriage InwardsCarriage Inwards Calculate Gross ProfitCalculate Gross Profit

Trading AccountTrading Account

The Trading Account is a financial The Trading Account is a financial statement which is included in the statement which is included in the Trading, Profit & Loss Account.Trading, Profit & Loss Account.

The Purpose of this account is to find The Purpose of this account is to find the Gross Profit or Loss.the Gross Profit or Loss.

Gross Profit is the difference between Gross Profit is the difference between Net Sales and Cost SalesNet Sales and Cost Sales

Accounts included in the Trading Accounts included in the Trading

The accounts included in the Trading a/c areThe accounts included in the Trading a/c are1.1. Stock AccountStock Account. We put the amounts of . We put the amounts of

opening stock and closing stockopening stock and closing stock2.2. Purchases a/cPurchases a/c. The cost of the goods bought. The cost of the goods bought3.3. Purchases returns a/c.Purchases returns a/c. The cost of bought The cost of bought

goods which are returned to the suppliergoods which are returned to the supplier4.4. Sales a/cSales a/c. The income from sales. The income from sales5.5. Sales returns a/cSales returns a/c. The goods returned to the . The goods returned to the

companycompany6.6. Carriage inwards a/cCarriage inwards a/c. The transportation of . The transportation of

goods boughtgoods bought

Vertical Form of Trading A/cVertical Form of Trading A/c

Trading A/c of ……. as at 31 December 20XX

Opening Stock   X Sales X

Purchases X   Less Sales Ret. (X)

Less Purchases ret. (X)    

Carriage inwards   X  

Less Closing Stock   (X)  

Gross Profit   X  

  X X

     

Discussion QuestionsDiscussion Questions

Discussion question 1. Find the Gross Profit Discussion question 1. Find the Gross Profit or lossor loss

A) Sales 2000, Purchases 1000, opening A) Sales 2000, Purchases 1000, opening stock 500stock 500

B) Sales 5000, Cost of Sales 4300B) Sales 5000, Cost of Sales 4300 C) Sales 13000, Opening stock 1000, Cost C) Sales 13000, Opening stock 1000, Cost

of sales 11000of sales 11000 D) Sales 16000, Sales returns 4000, D) Sales 16000, Sales returns 4000,

Purchases 7000, Opening Stock 1300, Purchases 7000, Opening Stock 1300, Closing Stock 5000Closing Stock 5000

Discussion QuestionsDiscussion Questions

Discussion question 2. Construct the Discussion question 2. Construct the Trading a/c using the following Trading a/c using the following information.information.

Sales 16000, Sales returns 4000, Sales 16000, Sales returns 4000, Purchases 7000, Opening Stock 1300, Purchases 7000, Opening Stock 1300, Closing Stock 5000Closing Stock 5000

More exercises page 13More exercises page 13