What's the difference between the Income Statement and the Trading Account?
The difference is scope: the Trading Account stops at “gross profit” (sales − cost of goods sold), while the Income Statement continues — taking gross profit, subtracting the remaining expenses, and reaching “net profit.” So the Trading Account is the first part of the Income Statement, and the statement is the complete picture. In modern IFRS-compatible accounting there's no separate trading account — its result lives inside the income statement.
The part vs. the whole
The Trading Account
A part — stops at gross profit
- Scope
- A single part: core trading profit only
- Stops at
- Gross profit (sales − cost of goods sold)
- Measures
- Your efficiency: how much above cost you sell
- In modern accounting
- Merged into the income statement as its top section
The Income Statement
Complete — reaches net profit
- Scope
- Complete: from revenue to net profit
- Stops at
- Net profit (the final result)
- Measures
- Your final profit after all expenses
- In modern accounting
- The single official IFRS-compatible statement
How the Trading Account fits inside the Income Statement
= The Trading Account
Net sales
− Cost of goods sold
= Gross profit
The rest of the Income Statement
− Operating expenses
± Other income & expenses
= Net profit
Income Statement = the Trading Account (the top section: gross profit) + the continuation down to net profit.
The difference in a nutshell
| Trading Account | Income Statement | |
|---|---|---|
| Scope | A part | Complete |
| Stops at | Gross profit | Net profit |
| Measures | Core trading efficiency | The final profit |
| In modern accounting | Merged into the statement | The official statement (IFRS) |
Frequently asked questions
So is the Trading Account part of the Income Statement?
Yes, exactly. The Trading Account is the first part (revenue − cost of goods sold = gross profit), and the Income Statement continues from gross profit: it subtracts the remaining expenses and adds other income until it reaches net profit.
Will I find a “Trading Account” report in Zemam?
Not as a separate report — by design. Its result (gross profit) appears as a subtotal inside the Income Statement, alongside cost of goods sold and net profit. The same information in one place, IFRS-compatible.
Is the Income Statement the same as the P&L Account?
In modern usage, the Income Statement combines what used to be the “Trading Account” + the “P&L Account” into one statement — so it's the complete picture, starting at revenue and ending at net profit.
Zemam gives you the complete income statement
One income statement showing cost of goods sold, gross profit (the Trading Account's result), expenses, and net profit — for any period, from double-entry. No need to produce a separate trading account; it's all in one place.
Note: “income statement” is also called the “profit or loss statement” or “statement of comprehensive income” — the core meaning is the same. Check with your accountant for disclosure details.