2. Last step in the accounting process
Prepared to know the balances of all the accounts
To check profit or loss during the previous year
Present financial position
3. Accounting Cycle
Entry in the books of
Original Entry
(ORIGINAL RECORD)
Posting in the concerned
Ledger account
(CLASSIFICATION)
Preparation of
Trial Balance
(CHECKING THE
ACCURACY)
Balancing of Real &
Personal accounts
Preparation of final accounts
(summary)
4. Trail Balance
Trial Balance is a list of closing balances of ledger accounts on
a certain date and is the first step towards the preparation of
financial statements
It is a working paper that accountants use as a basis while
preparing financial statements.
Trial balance ensures that the account balances are
accurately extracted from accounting ledgers.
Trial Balance confirms that the total of all debit balances
match the total of all credit balances.
5. Trading Profit and Loss Account
Trading profit and loss Account is prepared to know the net
loss or net profit of business during a particular accounting
period.
It is summary of all accounts that affect the profit or loss of a
business.
Expenses(direct and Indirect) are written in the Debit side
and Revenues are written in the Credit side.
6. Balance Sheet
Balance Sheet is a component of final account which
shows balances of capital, liabilities & assets.
It is the final phase of final account and accounting cycle as well.
It is a ‘mirror’ which reflects the true position of the
assets & liabilities of the business on a particular date.
7. Debit Credit
Opening stock 60000 Capital 140000
Sundry debtors 80000 Bills Payable 10000
Furniture 20000 Returns
Outward
2400
Plant 100000 Interest
received
1000
Purchases 340000 Sales 462000
Bills Receivable 22000 Comm.
Received
400
Carriage Inward 2600 Creditors 80000
Carriage Outward 1800
Insurance paid 1400
Return Inward 4000
Salaries 24000
Wages 20000
Cash At Bank 180000
Cash At Hand 2000
Total 695800 695800
8. 1. Closing Stock at Rs 1,00,000.
2. outstanding salaries Rs 6,000.
3. outstanding Wages Rs 1,000.
4. Insurance include a sum of Rs 350 relating to next year
