Answer the following questions:

“There is no need to find out the balance of goods sold account and goods purchases account? Why?

There is a trading account which gives details regarding the resultant balance after buying and selling. It accounts for all the transactions of buying and selling, which therefore calculates the Gross Profit or Gross Loss. And the Profit and Loss account contain all the expenses and gains of non-trading items. Therefore there is no need to find out the balance of the goods sold account and goods purchases account. They are done altogether in a simpler way.