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What are the Items included in trading account?

The trading account keeps the records of opening stock, purchase and direct expenses on the debit side, and direct income and closing stock on the credit side. Items included in debit column and credit column of trading account are as follows:

Account book

Debit items on trading account

Items included on the debit side of an account are:

1.Opening stock

Opening stock refers to the whole so that is available in the business at the beginning of the accounting period. The stock of goods that remain at the closing date of the previous year is brought down as opening stock at the beginning of the current year. In the case of the manufacturing concern, it consists of raw materials, work-in-progress goods, and finished goods. In case of a trading concern, it consists of different types of finished goods. The Debit side of the trading account begins with an opening stock.

2. Purchase and purchase return

Purchase refers to the total value of bolts forces by accounts throughout the year. But the purchase of assets and missed stationary are not considered as purchases. Return of goods by the concern of the supplier is purchase return or return outward. Purchase is recorded in the debit side of the trading account after opening stock and purchase return is debited from purchase to find net forces during the period.

3. Direct expenses

The expenses directly attributable to the purchase and production of goods are direct expenses. Direct expenses are recorded on the debit side of the trading account. It can be categorised as purchase-related expenses and factory-related expenses. 

  • Purchase-related expenses: expenses incurred in relation to goods purchased are purchase-related expenses. It includes carriage, freight, cartage, dock charge, clearing charge, octroi, customs duty, import duty, insurance on purchases, etc.
  • Factory expenses: expenses incurred inside the factory for the production of goods are factory-related expenses. They are also known as manufacturing expenses. It consists of labour, wedges, motive power, fuel, coal and coke, water and electricity, lighting and heating, the salary of factory employees, factory rent, royalty, consumable stores, factory insurance, depreciation on factory related assets, etc.

Credit items on trading account

Items included in the credit side of trading accounting are:

1. Sales and sales return

Sails referred to the total amount of goods sold by the firm during a given period of time. It includes credit sales as well as cash sales. But it does not record the sales of old assets. It is also known as direct income. Some of the buyers' May return the goods once sold fully or partially because of some person. This is known as sales return or returns inward. Sales are the first item on the credit side of the trading account, sales return is deducted from sales to find the net sales if any.

2. Closing stock

The values of raw material, work-in-progress goods, and finished goods which remain sold at the end of the accounting period are known as closing stock. The value of the closing stock is ascertained on the basis of cost or market price whichever is lower. It is recorded on the credit side of the trading account.


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