Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.

Final Accounts of a Sole Trade Business


Published on

Final Accounts

Published in: Education
  • Be the first to comment

Final Accounts of a Sole Trade Business

  1. 1. Module Developed by J.K.Saini, 1 Class XI- Accountancy
  2. 2. Objectives  Students will be able to prepare final statement of a business - Profit and loss account and Balance Sheet 2
  3. 3. The process of Accounting Cycle ends with the preparation of Final Accounts . So Let us begin various steps to compile final accounts Accounting Cycle : • Journal • Ledger • Trial Balance • Final Accounts 3
  4. 4. Final Statements of Sole Proprietor comprise of preparing the following statements • Trading and Profit and loss account • Balance Sheet Before we move further, let me elaborate on some of the new terms and their meaning Gross Profit = Net Sales – Cost of goods sold Cost of goods sold= Opening Stock+ net purchases + Direct Expenses – Closing Stock Direct Expenses: These are incurred on purchase and production of Expenses Like , Carriage, freight, Octroi, Wages, facrtory rent, Royalty 4
  5. 5. To Opening Stock To Purchases Less Purchase return TO Direct expenses To Gross Profit Rs .. .. .. ? By Sales .. Less Sales return … By Closing Stock Rs. .. .. Click here to listen to the sound 5
  6. 6. Now Let us move further to the second part of the income statement; i.e Profit and loss Account To Indirect Expenses and losses  Office and Administration Expense Selling and Distribution Expenses Financial Expenses Depreciation and Repairs Any other loss etc. To Net Profit Rs .. .. .. ? By Gross Profit By Income  Discount Received Commission received Interest Received etc. Rs. .. .. Click on the icon to listen ,, 6
  7. 7. Salaries, Rent, stationery, Telephone Charges, legal expense , postage etc : Advertisement, Carriage outwards, Commission, showroom rent, etc Bank charges, interest on loan and on capital Bad Debts, loss of goods by fire etc. 7
  8. 8. I hope you were able to understand the process of preparing first part of the final statements i.e. Calculating Net Profit/Net LossFeedback Now answer the following question:- 8
  9. 9. 9 Balance sheet is a statement prepared to know the financial position of the business at the end of the year ( that is balances of Assets and Liabilities) Balance Sheet
  10. 10. 10 Fixed Assets are long term assets which are not for sale in the ordinary course business. Current Assets are short term assets, which keep changing from one form to another within a short period of 12 months
  11. 11. 11 Feedback Now reflect on the following question:-