FINAL ACCOUNTS

Final Accounts are the means of conveying to management, owners and interested outsiders a concise picture of profitability and financial position of the business

Final Accounts includes the preparation of

1. Trading and profit and loss account or Income statement 2. Balance sheet or Position statement

Trading Profit and loss account

It is prepared to know the profit or loss earned by a concern

Balance sheet

It is prepared to know the financial position of the concern

TRADING ACCOUNT

First step in the preparation of final account It shows the result of trading activities Result of trading activities - Gross profit or Gross loss

FORMAT OF TRADING ACCOUNT

Dr
Particulars
To opening stock To Purchase xxx less purchase return xx To freight inward To wages To carriage inward To fuel and power To manufacturing expenses To Coal, water, gas To factory expenses To motive power To octroi To gross profit transferred to profit and loss account

Cr
Amount
Xxx

Particulars
By sales xxx less sales return x x

Amount
Xxx Xxx

xxx Xxx xxx Xxx xxx xxx Xxx xxx xxx xxx

By closing stock

Xxx Xxx

By gross loss transferred to profit and loss account

xxx

Xxx

Profit and loss account

It is the second step in the preparation of final accounts It is debited with all operating expenses or losses and credited with all revenue incomes and gains Result of profit and loss a/c

Net Profit or Net loss