Closing of Profit and Loss Account

All accounts involved in the calculation of Profit or Loss(Sales Revenue, Sales Returns, Cost of Sales, Other Expense and Other Income) will be closed down and transferred to the trading account
Identify Sales Revenue Account, Sales Returns Account, Cost of Sales Account, Other Expense Account and Other Income Account

Reduce all account to 0 by decreasing the values of the account by the balance brought down and put them in the profit or loss account

The Balance Brought down for the profit or loss account is the profit/loss for the period

Closing of Trading Account

All accounts involved in the calculation of Gross Profit(Sales Revenue, Sales Returns and Cost of Sales) will be closed down and transferred to the trading account
Identify Sales Revenue Account, Sales Returns Account and Cost of Sales Account

Reduce all account to 0 by decreasing the values of the account by the balance brought down and put them into the trading account

The Balance Brought down for the trading account is the gross profit