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JAMB Principles of Accounts 2006 Question 5

Question 5

Final Accounts of a Sole Trader

The objective of a trading account is to establish the

  1. A.cost of goods sold
  2. B.gross profit
  3. C.manufacturing profit
  4. D.net profit.
Show the answer and explanation

Answer: B (gross profit)

Explanation

The trading account compares sales with the cost of goods sold to find the gross profit.