Incidental Trading Activity

What is Incidental Trading Activity?

Incidental Trading Activity, also called as incidentals, are the gratuities and fees or costs that are incurred in addition to the primary item, service or event paid for during trading pursuits.

Sporadically, trading pursuits such as hospital, chemist shop, beauty parlour, canteen, etc., also take place in such establishments to furnish certain provisions to members or public. In such a scenario, trading A/c has to be outlined to determine the outcome of such incidental pursuit. The profit from such trading pursuits is solicited to accomplish the primary objectives for which the establishment was set up and it is being transferred to the Income and Expenditure A/c. It is relevant to note the following procedure :

  • Outline the trading A/c to ascertain either profit or loss due to incidental commercial pursuit. All costs and revenues straightly and principally associated to such pursuit are documented in the trading A/c. Balance of trading A/c is being transferred to the Income and Expenditure A/c
  • Income and Expenditure A/c documents, besides to the trading Profit (or loss), all other incomes and expenses are not documented in the Trading A/c. Surfeit or deficit disclosed by the Income and Expenditure A/c is being transferred to capital or general fund

The above mentioned is the concept that is explained in detail about Incidental Trading Activity for the class 12 students. To know more, stay tuned to BYJU’S.