Trading Account Format

Blank format

Begin with the three-line heading: business name, 'Trading Account', and 'for the year ended ...'. Use the inner money column for workings (net purchases and cost of purchases) and the outer money column for the main figures such as net sales, cost of sales and gross profit; indent each item under its section heading.

Parts of the format

Three-line heading

The business name, the account name ('Trading Account') and the period 'for the year ended ...'. A period is stated because the account covers a period, not a single date.

Net sales section

Sales less sales returns gives net sales, recorded in the outer money column.

Cost of sales section

Opening inventory plus cost of purchases gives cost of goods available for sale; deducting closing inventory then gives cost of sales.

Net purchases and cost of purchases working

Purchases less purchases returns gives net purchases; add carriage inwards to give cost of purchases in the inner money column.

Gross profit

The final line: net sales less cost of sales. It is carried down to the Profit and Loss Account as its starting point.

Filled example

Perniagaan Restu Jaya, a sole-proprietor hardware shop in Ipoh, closes its accounts on 31 December 2023. Its records show sales RM185,000, sales returns RM5,000, opening inventory RM22,000, purchases RM120,000, purchases returns RM4,000, carriage inwards RM3,000 and closing inventory RM25,000.

Common layout errors

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