What Is Trading and Demat Account & Its Purpose?

Posted by Shrikant Sharma on July 19th, 2018

The account is designed in such a way that it holds the statement of gross profit and/or gross loss that a company or a business enterprise acquires. The net profit or the net loss of the firm is calculated from the profit and loss account. On the other hand a trading account just gives the gross profit or gross loss along with the net sales and the rate of profit sharing ratio.

The account which is particularly designed for holding the statement of shares purchased with the help of an electronic device or in the dematerialized format. It keeps an overview of the financial instruments which includes government securities, mutual funds, exchange trade funds, shares and bonds.

Understanding trading and demat account

The gross profit of a business enterprise is that source from which the expenses are met. The gross profit is a very vital aspect. It is that summation of money which is adequate to meet the success of all the expenses that is incurred by the business enterprise.

  • A demat account provides a roof under which a share along with other financial instruments are safe and secure. Due to this property it is also known as the common bank.
  • The net sales in a trading account is calculated by subtracting the sales returns from that of the gross amount of sales. This account can only calculate the gross sales of a business enterprise.
  • You do not have to keep on repeating the work of adding your identity details when you apply for anything in variant companies. The demat account does that for you as it provides them with the details you have already provided at the beginning of making a demat account.
  • The net sales and the percentage of gross profit are calculated in the trading account. It is also used to calculate the profit sharing ratio. This profit sharing ratio is to calculate the success of the business. The comparison is done between the rate of the assessment year with that of the previous year which gives the result whether it is a success or a failure.
  • It is difficult to handle the paper certificates and in that case a demat account is too easy to handle. You do not have to keep the papers in a safe place, the demat account will do all the works when it comes to security of the details.

This will definitely give you a clear view of what is trading and demat account.

The author of this article writes a lot on various matters after doing the best possible research on it. The author is a blogger herself and this piece of writing is about what is trading and demat account.

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Shrikant Sharma

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Shrikant Sharma
Joined: February 19th, 2018
Articles Posted: 145

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