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Question
Trading a/c is prepared on ___________ basis.
Trading a/c is prepared on ___________ basis.
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Solution
The correct option is A accrual
At the end of financial year, books of account are closed to prepare the financial statement. Financial statements are prepared on the basis of matching concept which defines that all the expenses and incomes of the particular accounting period should be recorded in the same financial year irrespective of the payment received/paid or not.
Hence, accrual system of accounting records all the transactions of the particular accounting period irrespective of the payment received/paid.
Trading account is prepared on accrual basis.
At the end of financial year, books of account are closed to prepare the financial statement.
Financial statements are prepared on the basis of matching concept which defines that all the expenses and incomes of the particular accounting period should be recorded in the same financial year irrespective of the payment received/paid or not.
Hence, accrual system of accounting records all the transactions of the particular accounting period irrespective of the payment received/paid.
Trading account is prepared on accrual basis.
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