The purpose of preparing a trading account is to ascertain

The purpose of preparing a trading account is to ascertain the gross profit earned or the gross loss incurred by a business during a particular accounting period. A trading account is an account in the financial records of a business that is used to calculate the gross profit or gross loss of the business. It shows the total revenue generated by the business during the accounting period, as well as the total cost of goods sold during the same period. By deducting the cost of goods sold from the total revenue generated, the trading account shows the gross profit earned by the business. If the cost of goods sold exceeds the revenue generated, the trading account shows a gross loss. In summary, the purpose of preparing a trading account is to calculate the gross profit or gross loss of a business during a particular accounting period. This is done by comparing the total revenue generated by the business to the total cost of goods sold during the same period.