IMPORTANT RULE: Assets = Liabilities + Owner's Equity
Trading: Buying and Selling
What's the Purpose of Trading then?
To Make PROFIT!
Gross Profit occurs when selling price EXCEEDS cost price
>>Trading account is an account prepared specially to calculate the Gross Profit for a particular period
>>It contains information transferred from accounts related to Purchases and Sales
Example
1. Net Purchases = Purchases - less: returns outwards
2. Net Sale = Sales - less: returns inwards
3. Gross Profit = Net SALE - Net PURCHASES
