| Basis | Trading Account | Profit and Loss A/C |
| Relation | It is a part of the project and Loss a/c | Profit and loss is the main account |
| Nature | Trading Account is prepared to ascertain profit or | Profit and loss is prepared to ascertain net profit or net loss of the business |
| | loss | |
| Transfer of Balance | Balance of Trading Account is transferred to profit and loss account | Balance of profit and loss account is transferred to capital account of the proprietor. |
