Class 12B 17th September 2012 “The only person who never makes a mistake is the person who never does anything” Theodore Roosevelt.

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Class 12B 17th September 2012 “The only person who never makes a mistake is the person who never does anything” Theodore Roosevelt

What will we learn today? What a Trading Account is Why it is prepared What Cost of Sales is and how it is calculated What a Gross Profit/Loss is and how it is calculated

The Trading Account A profit is the money you make when you sell something for more than you paid for it. A loss is the money you lose when you sell something for less than you paid for it

The Trading Account Cost of Sales: The costs of making the goods you sold

Case Study Cadbury’s Dairy Milk Selling Price of 1 bar = €1 Cost of making bar = €0.60 Profit = €0.40 What if they sold 30 bars?

Case Study How many types of bars do Cadbury’s make? LOADS!!! It can be hard to keep track of all of the costs and also the sales. This is why we use the sales and purchases A/C

The Trading Account The Trading Account records all details about the goods or services that were bought and sold by a business during the previous year. The Trading Period refers to the length of time the final accounts are prepared for.

Question Maynooth Ltd Sales €60,000; Cost of Sales €40,000 Gross Profit??? Ireland Ltd Sales €75,000; Cost of Sales €30,000

Cost of Sales The Cost of Sales is the total amount it cost the firm to produce the goods they actually sold. What costs are included here?

Example Gold Ltd Purchases €50,000; Carriage Inwards €4,000; Import duty €5,000. Cost of Sales ???

Question Diamond Ltd Purchases €40,000; Carriage Inwards €5,000; Import duty €6,000. Cost of Sales ???

Stock Opening Stock is the cost of goods held in stock at the start of the trading period Closing Stock is the cost of goods held in stock at the end of the trading period

Example Opening Stock €15,000; Purchases €40,000; Carriage Inwards €3,000; Closing Stock €5,000 Cost of Sales???

Question Ruby Ltd Opening Stock €10,000; Purchases €55,000; Carriage Inwards €6,000; Closing Stock €15,000 Cost of Sales???

Self-Test Questions What is a Trading Account? Why is it prepared? What is Cost of Sales? How is it calculated? What is a Gross Profit/Loss?