ZIMSEC O Level Principles of Accounts Notes: The format of a Simple Trading and Profit and Loss Account

The Name of the Business/Proprieter

Less Cost of Sales
Opening stockxx
Add Purchases


Less Closing stock



Gross Profitxxx
Rent receivablexxxx
Less: Expenses
Advertising expensesxx
Motor vehicle expensesxx


Net Profit/Loss


NB The exact names and types of expenses and other income will vary from business to business you should take your cue from the examination question

Trading and Profit and Loss Account and the Expense accounts

  • Typical expense accounts such as rent, wages and salaries etc are closed off at the end of the trading period
  • This is done by crediting the expense accounts which have a debit balance and debiting the Profit and Loss account
  • Since the Trading and Profit and Loss Account is prepared in a columnar expenses are deducted from the gross profit instead
  • It is customary to add up all the expenses first then deducting the entire column from the gross profit (after adding other revenue)
  • The result is net profit or net loss

To access more topics go to the Principles of Accounts Notes.


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