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Chapter 2

Example 5: Solution (cont.)

The part of the statement of profit or loss which calculates gross profit is known
as the trading account. The trading account is thus a sub-section of the statement
of profit or loss although its name does not appear within the statement of profit or
loss. Nevertheless, it is a very important in your exam part of the statement of
profit or loss and you may be asked to prepare a trading account.

Statement of financial position of Nadim as at the end of the month

Assets $000 $000
Land
Buildings
Office equipment
––––

Current assets
Inventories
Receivables
Bank balance
Cash in hand
––––

––––

––––
Capital + Liabilities

Capital

Non-current liabilities
Bank loan

Current liabilities
Payables
––––

––––

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