Trading account in AccBooks AI

What is a trading account?

The trading account is the top portion of the Profit & Loss statement — it shows revenue, cost of goods sold (COGS) and gross profit. It focuses specifically on the trading margin of the business without the distraction of overheads and finance costs.

Revenue (turnover)
− Cost of goods sold (COGS)
= Gross profit

The gross profit margin (gross profit ÷ revenue × 100) is one of the most important KPIs for any product or service business.

Why look at the trading account separately?

• Margin analysis — track whether your gross margin is improving or deteriorating over time.
• Pricing decisions — compare gross margins across product lines to focus on high-margin business.
• Supplier negotiations — quantify the impact of a supplier price increase on your margin.
• Benchmarking — compare your gross margin against industry averages.

Generating the trading account

1. Go to Reports → Profit & Loss.
2. Click Customise.
3. Under Report sections, deselect overheads, finance costs and below-the-line items.
4. Click Apply.

Alternatively, AccBooks offers a dedicated Trading account shortcut under Reports → Trading account.

What goes in COGS vs overheads?

The division between COGS and overheads is a judgement call, but the principle is:

Cost of goods sold (COGS) — nominal codes 5000–5999:

• Direct materials
• Direct labour (wages for production staff, not admin)
• Direct manufacturing costs
• Delivery and fulfilment costs
• Import duties on goods for resale
• Subcontractor costs directly related to sales

Overheads — nominal codes 6000–6999:

• Rent and rates
• Admin salaries
• Marketing and advertising
• Insurance
• Utilities
• Professional fees
• Depreciation

Gross margin by product or service

AccBooks lets you tag transactions with a Project or Department to produce a trading account for individual product lines:

1. Go to Reports → Trading account.
2. Under Filter, select the project or department.
3. AccBooks shows revenue and COGS for that segment only.

This is extremely useful for businesses with multiple revenue streams — you might find that one product line has a 60% gross margin while another has only 15%.

Comparing periods

Click Compare to on the trading account to show:

• Same period last year (year-on-year margin trend).
• Previous month (month-on-month trend).
• Budget (actual vs planned margin).

The comparison shows absolute variance (£) and percentage variance for every line.

Stock and work in progress

If you hold stock, COGS is calculated as:

Opening stock + Purchases − Closing stock = COGS

Update your closing stock valuation at period-end under Settings → Stock valuation. AccBooks posts the stock adjustment journal automatically.

Work in progress (WIP) is handled similarly — go to Reports → WIP schedule to manage partially completed projects.