Trading account

Trading account

High Risk Investment Warning: Trading foreign exchange or contracts for differences on margin carries a high level of risk, and may not be suitable for all investors. Why sign up for a Practice Account? Trading foreign exchange or contracts for differences on margin carries a high level of risk, and may trading account be suitable for all investors.

The possibility exists that you could sustain a loss of some or all of your deposited funds and therefore, you should not speculate with capital that you cannot afford to lose. Before deciding to trade the products offered by ICM you should carefully consider your objectives, financial situation, needs and level of experience. First part is called as trading account and the second part is called as profit and loss account. To know the gross profit or gross loss of the business. Whether the material cost and the direct expenses are covered or no.

Material cost means the cost of items used to produce the goods for sale and direct expenses means the expenses directly related to the production to make the goods for salable purpose. By preparing the trading account can make certain decisions in respect of saving the cost of material and direct expenses to increase more profitability. The rates of products also can be decided after having the idea of gross profit or gross loss. It should be noted that no firm can run the business for a longer period if it is running into gross loss. Comparison of gross profit can be done to know the improvement. Trading account is a statement which is prepared with the help of the trial balance. All the debit items relating to trading account are written in debit side of trading account and all credit items relating trading account are written in credit side of trading account.

Following items are shown in expenditure column and the related amount is shown in Amount Dr. Wages to worker, directly involved in production. Duties and taxes paid on purchases which are not supposed to be claimed by the firm in either way. Salary of factory staff who is directly involved in production. Packing material and charges for making the goods for salable purpose. Following items are shown in income side of trading account and the amount to be shown in Cr. Sale of scrap relating to the produced items.

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