Financial Statements

Prepared By: Ankit Singh Ray MBA 1st Semester sec-A

4/7/2012 1

CONTENTS
INTRODUCTION IMPORTANCE USERS TRADING ACCOUNT PROFIT & LOSS ACCOUNT BALANCE SHEET LIMITATIONS CONCLUSION

INTRODUCTION

Financial Statements may refer to any formal and original statements which disclose financial information relating to any business. Traditionally, the term Financial Statement is used to denote only two basic statements- TRADING and PROFIT & LOSS ACCOUNTS.

In addition-: Surplus statement or Retain earnings statement.

IMPORTANCE
12345KNOWING FINANCIAL POSITION MANAGEMENT DECISION MAKING USERS COMPARISION

USERS

INVESTORS SUPPLIERS GOVERNMENT PUBLIC EMPLOYEES MANAGEMENT BANKS

TRADING ACCOUNT

TRADING A/C is one of the Financial Statement which shows the results of buying and selling of goods and services during a specified period.

ITEMS OF TRADING A/C

DEBIT SIDE

OPENING STOCK PURCHASES AND PURCHASE RETURN DIRECT EXPENSES

FREIGHT INWARD IMPORT DUTY CARTAGE INWARD CARRAIGE INWARDS

ITEMS OF TRADING A/C CREDIT SIDE

SALES SALES RETURN CLOSING STOCK ABNORMAL LOSS OF STOCK

FORMAT OF

TRADING ACCOUNT
for the year ending.

Dr.

Cr.

TO OPENING STOCK
TO PURCHASE
Less: RETURN OUTWARD

BY SALES
LESS: RETURN INWARDS

BY CLOSING STOCK BY ABNORMAL LOSS

TO DIRECT EXPENSES TO GROSS PROFIT transfer to P & L A/C

BY GROSS LOSS transfer to P & L A/C

* Either Gross Profit or Gross Loss shall appear.

PROFIT & LOSS A/C

A Profit & Loss A/c is an account into which all gains and losses are collected in order to ascertain the excess of gains over the losses or vice versa.

ITEMS OF PROFIT AND LOSS ACCOUNT

DEBIT SIDE
SALARY STATIONERY & PRINTING POSTAGE & TELEGRAM INSURANCE PREMIUM INTEREST PAID GENRAL EXPENSES ADVERTISEMENT BAD DEBTS COMMISSION PAID TELEPHONE EXPENSES DISCOUNT ALLOWED

ITEMS OF PROFIT AND LOSS ACCOUNT

CREDIT SIDE
BAD DEBTS RECOVERED DISCOUNT RECEIVED DIVIDEND ON SHARE COMMISSION EARNED INTEREST RECEIVED INCOME FROM INVESTMENT MISC. REVENUE GAINS

FORMAT OF

PROFIT & LOSS A/C

Dr TO GROSS LOSS
Transferred from Trading A/C for the year ending on.

Cr

BY GROSS PROFIT Transferred from Trading A/C

TO SALARIES TO STATIONERY and PRINTING TO POSTAGE and TELEGRAMS TO AUDIT FEES TO LEGAL CHARGES TO TELEPHONE EXP. TO DEPRECIATION

BY DISC. RECEIVED BY COMMISSION EARNED. BY B/D RECOVERED BY DIVIDENDS BY INCOME from Other source BY NET LOSS (transfer to CAPITAL
A/C)

CONTD.
TO OFFICE EXP. TO GEN. EXP TO ADVERTISEMENT TO FREIGHT OUTWARD TO BAD DEBTS .TO NET PROFIT Transferred to
CAPITAL A/C

*EITHER NET
PROFIT/LOSS OR SHALL APPEAR.

BALANCE SHEET

BALANCE SHEET is a statement of ASSETS and LIABILITIES of an enterprise at a given date.

A BALANCE SHEET is a screen picture of the financial position of a going business at a certain moment.

ITEMS OF BALANCE SHEET

ASSETS
-CASH -BUILDING -LAND -MACHINE -GOODWILL -FURNITURE -MOBILE

ITEMS OF BALANCE SHEET

LIABILITIES

- CREDITORS
- BANK OVERDRAFT - BILLS PAYABLE - LOANS

FORMAT OF

BALANCE SHEET
as at

. LIABILITIES CAPITAL:
OPENING BAL.
Add: NET PROFIT

Rs

LESS: DRAWING

LOANS BANK OVERDRAFT SUNDRY CREDITORS BILLS PAYBLE

GOODWILL LAND & BUILDING PLANT & MACHINERY FURNITURE INVESTMENT CLOSING STOCK DEBTORS BILLS RECEIVABLE CASH IN HAND CASH AT BANK -

ASSETS

Rs

LIMITATIONS

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POSITION OF FIRM BALANCE SHEET PROFIT RECORDS ONLY FINANCIAL TRANSACTION

CONCLUSION

Financial statements are very important for any firm because they tell them how much they gained or loss at the end of an accounting period.

BIBLIOGRAPHY

Ms. Fozia Mehtab (faculty M.B.A) T . S . Garewal P . C . Tulsian Dr. S . M . Shukla