Concept:A trading account is a section of the final accounts prepared by a business to show the direct result of buying and selling goods.
Explanation:The trading account records sales on the credit side and the cost of goods sold on the debit side.
Cost of goods sold includes opening stock, purchases, and direct expenses, minus closing stock.
When we subtract the cost of goods sold from sales, the remaining figure is the gross profit or gross loss.
This shows whether the core trading activity of the business was profitable before considering other operating expenses.
Net profit or loss is found later in the profit and loss account, after all indirect expenses and incomes are included.
Carriage outwards is an indirect expense, not part of the trading account.
Sales alone are not ascertained through the trading account; they are simply recorded there.
Therefore, the main purpose of the trading account is to determine the gross profit or loss.
Answer:C. gross profit or loss