Some of the objectives of preparing Trading account are as follows:
- To determine the cost of production which helps to calculate the gross profit or loss of trading activities.
- To assemble all the direct expenses of bringing the goods in saleable condition.
- To ascertain the performance of different years of business through the gross profit ratio which is calculated by dividing the gross profit by sales.
- To help to calculate the ratio of cost of goods sold to sales which is helpful in the fixation of price of the products.