The document provides information on preparing final accounts for sole proprietorship businesses. It explains that final accounts include a trading and profit & loss account to determine profit or loss, and a balance sheet to assess financial position with assets and liabilities. Steps for preparation include journal entries, ledger, trial balance, then trading, profit & loss, and balance sheet accounts. An example is given with information to use to prepare these final accounts for a business as of March 31, 2001.

1. Final Accounts
By
S.SALOMY
Asst professor

2. INTRODUCTION TO FINAL ACCOUNTS
While the Trial Balance checks the accuracy of
ledger balances, the final account reveals two
facts:
1. Whether the business is in profit or loss during
the period covered by the Trial Balance. A Trading
and Profit & Loss account also known as income
statement is prepared for this purpose.
2. What is the financial position (financial position
means picture of assets and liabilities) of the
business? This is judged by preparing a balance
sheet for the business.

3. Final accounts are statutory
requirements for all type of
registered organizations. They
are popularly known as Financial
Statements.

4. preparation of final accounts should be dealt separately for all the above category of
organizations
Particulars Name of Chapter1
1. Accounting for Sole Proprietorship Concern Final Account
2.Accounting for Partnership Firm Partnership Account
3. Accounting for Joint Stock Companies Company Account
4. Accounting for Other Business Activity like Shipping, Leasing
etc.
Miscellaneous Account

5. Preparation of Final Accounts when Transactions/Events are given:
Step 1 Journal entry
Step 2 Ledger entry
Step 3 Trial balance
Step 4 Trading Account
Step 5 P & L Account
Step 6 Balance Sheet
Book-keeping
Income statement

6. Trading and P & L A/c for the year -----
Particulars Amount Particulars Amount
To Opening stock ——
To Purchases (less return) ——
To Direct wages ——
To Direct expenses ——
To Carriage inward -------
To Duty and clearing charges ------
To Fuel and energy ------
To Octroi duty etc
To Gross profit (GP) b/d -------
TOTAL
By Sales (less return) ———
By Gross loss b/d ———
----- --------

7. P & L A/cParticulars Amount Particulars Amount
To Gross loss c/d ——
To General and administrative ——-
TO Salaries
TO Rent, rates and taxes
TO Stationary and printing
To Telephone bill
To General expenses
To Trade expenses
To Insurance premium
To Loss by fire, theft, etc
To Discount allowed
To Office lighting
To Depreciation
To Bad debt written off
To Repairs
To Audit fee
To Preliminary expenses written off
To Selling and distribution ——
expenses
To Carriage outward
To Packaging material
To Salesman commission
To Conveyance
To Advertisement
To Export duty etc.
To Financial Expenses ———
To Interest paid
To Tax paid etc.
To Net profit (NP) b/d
By Gross profit (GP) c/d ——
By Other income ——-
By Sale of scrap material
By Discount received
By Rent received
Commission received
Interest received
Dividend received
Bad debt recovered
By Net Loss b/d ——

8. BALANCE SHEET
LIBULITIES Amount ASSETS Amount
Capital ——
Add Net Profit or Less Net Loss ——
(as per P & L A/c)
Less drawings ——
Long-term loan ——
Investments ———
Current liability
Trade creditors/sundry creditors ——
Bills Payable (B/P ——
Bank overdraft ——
Outstanding expenses ——
e.g. Outstanding Rent/Tax/Wages etc.
Fixed Assets
Land and building ——
Plant and machinery ——
Furniture ——
Fixture and fittings ——
Marketable securities ——
Current assets
Cash in hand ——
Cash at bank ——
Trade debtors/sundry ——
Bills Receivable (B/R) ——
Prepaid expenses like Prepaid Rent/Tax/Wages
etc.

9. prepare final accounts by using following information as on 31/3/2001
PARTICULARS AMOUNT
Purchases 27,100
Sales 27,000
Purchase Return 1,100
sales Return 100
Brokerage charges 40
Discount Allowed 100
OFFICE Rent 1,000
Salary 1500
Telephone BILL 500
Travelling Expenses 100
PARTICULARS AMOUNT
discount received 100
Capital 50,000
Drawings 1,500
CREDITORS 4,100
Machinery and Furniture 1,500
Typewriter 2100
LAND AND BUILDING 1800
Debtors 2,900
Cash 15,760
Bank 12,800

10. prepare final accounts by using following information as on 31/3/2001
PARTICULARS AMOUNT
Purchases 27,100
Sales 27,000
Purchase Return 1,100
sales Return 100
Brokerage charges 40
Discount Allowed 100
OFFICE Rent 1,000
Salary 1500
Telephone BILL 500
Travelling Expenses 100
PARTICULARS AMOUNT
discount received 100
Capital 50,000
Drawings 1,500
CREDITORS 4,100
Machinery and Furniture 1,500
Typewriter 2100
LAND AND BUILDING 1800
Debtors 2,900
Cash 15,760
Bank 12,800

11. Purchases 27,100 manufacturing expenses trading a/c debit side
Sales 27,000 ------------------------------------------------------- m income T a/c credit side
Purchase Return 1,100 _ from purchase
Sales Return 100 _ from sales
Brokerage charges 40 office exp p&l debit side
Discount Allowed 100 ------------------------------------------------------------office exp p&l debit side
OFFICE Rent 1,000--------------------------------------------------------------- office exp p&l debit side
Salary 1500 ------------------------------------------------------------------------office exp p&l debit side
Telephone BILL 500 -----------------------------------------------------------------office exp p&l debit side
Travelling Expenses 100 -----------------------------------------------------------office exp p&l debit side
discount received 100---------------------------------------------------------------- office exp p&l credit side
Capital 50,000 ------------------------------------------------------------------------------liabilities
Drawings 1,500 --------------------------------------------------------------------------------- _ capital
CREDITORS 4,100 ---------------------------------------------------------------------------- liabilities
Machinery and Furniture 1,500 ----------------- ASSET
Debtors 2,900----------------------------------------- ASSET
Cash 15,760----------------------------------------- ASSETS-
Bank 12,800 ------------------------------------------ ASSET
TYPE WRITER 2100 ASSETS
LAND & BUILDING 1800 ASSETS

12. Tading account
Particulars Amount Particulars Amount
To Purchases 27,100 By Sales 27,000
Less Return 1,100 26,000 Less Return 100 26,900
To Gross Profit b/d 900
Total 26900 Total 26900
Profit and loss account
particulars amount particulars amount
To Brokerage 40 By Gross Profit c/d 900
To Discount Allowed 100 By Discount recived 100
To Rent 1,000 By Net Loss 2,240
To Salary 1,500
To Telephone Rent 500
To Travelling Expenses 100
Total 3,240 Total 3,240

13. Balance sheet
Liabilities Amount Assets Amount
Capital 50,000 Fixed Assets:
Less Drawings 1,500
Machinery and
Furniture 1,500
Less Net Loss Typewriter 2,100
(as per P & L A/c) 2,240 46,260
Land and building 1,800
S. Creditors: 4,100
Current Assets:
S. Debtors: 2,900
Cash 15,760
Bank 12,800
Total 50,360 Total 50,360