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Final accounts
Meaning of Final Account:
The accounts which are prepared at the end of the
financial year are called as FINAL ACCOUNTS.

 Final Account consists of the following:-
   1)Trading account.
   2)Profit and Loss account.
   3)Balance sheet.
Trading account is a nominal account.It is a part of Profit
  and Loss account.
It is generally prepared to find the gross profit or gross
  loss of the business during the financial year.

Explanation of some important points:
   1)Opening stock.
   2)Purchases.
   3)Purchase return.
   4)Wages.
   5)Sales.
   6)Sales return.
   7)Carriage inward.
   8)Royalty.
   9)Gross profit/loss.
Profit and Loss account is open with either gross profit or gross
   loss b/d from trading account.
It is prepared to find out net profit or net loss of the business.

Explanation of some important points:
     1)Salaries.                  6)Interest.

     2)Discount.                  7)Bad debt.
     3)Travelling expenses.       8)Depreciation.

     4)Insurance.                 9)Discount received.
     5)Printing and Stationary.   10)Net profit/loss.
Balance sheet is a statement.It is not actually an
 account.It is a statement showing the financial
 position of the business on a particular date.It
 shows all the Assets and Liabilities of the
 business.It is the soul of the business.

  Asset side of the balance   Liability side of the balance
  sheet                       sheet
  1)Fixed Assets.             1)Fixed liability.
  2)Current Assets.           2)Current liability.
  3)Fictitious Assets.        3)Contingent liability.
Ex: Following is the trail balance of Ganesh and Shripad.
                     Trial balance as on 31st march 2009
     Debit Balances          Amount         Credit Balances         Amount
Opening stock                 44000    Reserve for doubtful debts     2100
Building                      80000    Sundry creditors              55400
Patents                       10000    Bills payable                 10000
Bills Receivable              28000    Sales                        200000
Purchases                    130000    General reserve               28000
Audit fees                     6000    Capital account
Bad debts                      3500             Ganesh               70000
Cash at bank                  11500             Shripad              70000
Travelling expenses            4200    Outstanding salaries           2700
Wages and Salaries            12000
Sundry debtors                52000
Unproductive wages             1900
Motor car                     45000
Trade expenses                 2400
General expenses               1800
Rent(for 9 months)             4500
discount                       1400

                             438200                                 438200
1)Closing stock is valued at Rs.45000cost price
And Rs.47000 market price.
2)Bills receivable included a dishonoured bill of Rs.3000.
3)Goods of Rs.2500 were taken by shripad,
Goods worth Rs.4000 were sold on 27th march 2009,but no
  entry was made In the books of accounts.
4)Write off Rs.2000 for bad debt and maintain R.D.D. at 5%
  on sundry debtors.
5)Travelling expenses included personal travelling
  expensesRs.800 for mr.ganesh.
6)Depreciation on building at 7.5 % p.a.
Mrs.Ganesh & Shripad
                        Trading Account
                   For the year ended 31st march 2009


   Particulars      Amt.     Amt.        Particulars    Amt.    Amt.
To opening stock             44000 By sales             200000
To purchases                130000 (+)unrecorded          4000 204000
To Wages and                       sales
salaries                     12000 By goods taken
To Trade                           for personal use-
expenses                      2400 shripad                       2500
To gross profit              63100 By closing stock             45000
c/d


                            251500                             251500
Particulars      Amt.    Amt.        Particulars       Amt.   Amt.
To audit fees                 6000
To Bad debts          3500           By Gross profit b/d          63100
+New bad debts        2000
+new R.D.D.           2850
                     ↔↔↔
                      8350
-old R.D.D.           2100    6250
To Discount                   1400
To dep.on Building            6000
To general exp.               1800
To unproductive
wages                         1900
To travelling exp.    4200
-personal              800    3400
To rent               4500
+o/s                  1500    6000

To net profit
transferred to
capital accounts
Ganesh               15175
Shripad              15175   30350

                             63100                                63100
Liabilities      Amt.     Amt.           Assets        Amt.     Amt.
Capital accounts                       Building             80000
Ganesh                70000            - depreciation        6000    74000
+net profit           15175            Patents                       10000
                      ↔↔↔
                      85175            Bills receivable     28000
-drawings (personal     800    84375   - dishonor            3000    25000
travelling)
Shripad               70000            Cash at bank                  11500
+ net profit          15175            Sundry debtors       52000
                      ↔↔↔              + dishonored bill     3000
                      85175            + unrecorded sales    4000
- Drawings             2500    82675                        ↔↔↔
Sundry creditors               55400                        59000
Bills payable                  10000   - New bad debts       2000
General reserve                28000   - New R.D.D.5%        2850    54150
O/s salaries                    2700   Motor car                     45000
O/s Rent                        1500
                                       Closing stock                 45000


                              264650                                264650
Final accounts

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Final accounts

  • 2. Meaning of Final Account: The accounts which are prepared at the end of the financial year are called as FINAL ACCOUNTS. Final Account consists of the following:- 1)Trading account. 2)Profit and Loss account. 3)Balance sheet.
  • 3. Trading account is a nominal account.It is a part of Profit and Loss account. It is generally prepared to find the gross profit or gross loss of the business during the financial year. Explanation of some important points: 1)Opening stock. 2)Purchases. 3)Purchase return. 4)Wages. 5)Sales. 6)Sales return. 7)Carriage inward. 8)Royalty. 9)Gross profit/loss.
  • 4. Profit and Loss account is open with either gross profit or gross loss b/d from trading account. It is prepared to find out net profit or net loss of the business. Explanation of some important points: 1)Salaries. 6)Interest. 2)Discount. 7)Bad debt. 3)Travelling expenses. 8)Depreciation. 4)Insurance. 9)Discount received. 5)Printing and Stationary. 10)Net profit/loss.
  • 5. Balance sheet is a statement.It is not actually an account.It is a statement showing the financial position of the business on a particular date.It shows all the Assets and Liabilities of the business.It is the soul of the business. Asset side of the balance Liability side of the balance sheet sheet 1)Fixed Assets. 1)Fixed liability. 2)Current Assets. 2)Current liability. 3)Fictitious Assets. 3)Contingent liability.
  • 6. Ex: Following is the trail balance of Ganesh and Shripad. Trial balance as on 31st march 2009 Debit Balances Amount Credit Balances Amount Opening stock 44000 Reserve for doubtful debts 2100 Building 80000 Sundry creditors 55400 Patents 10000 Bills payable 10000 Bills Receivable 28000 Sales 200000 Purchases 130000 General reserve 28000 Audit fees 6000 Capital account Bad debts 3500 Ganesh 70000 Cash at bank 11500 Shripad 70000 Travelling expenses 4200 Outstanding salaries 2700 Wages and Salaries 12000 Sundry debtors 52000 Unproductive wages 1900 Motor car 45000 Trade expenses 2400 General expenses 1800 Rent(for 9 months) 4500 discount 1400 438200 438200
  • 7. 1)Closing stock is valued at Rs.45000cost price And Rs.47000 market price. 2)Bills receivable included a dishonoured bill of Rs.3000. 3)Goods of Rs.2500 were taken by shripad, Goods worth Rs.4000 were sold on 27th march 2009,but no entry was made In the books of accounts. 4)Write off Rs.2000 for bad debt and maintain R.D.D. at 5% on sundry debtors. 5)Travelling expenses included personal travelling expensesRs.800 for mr.ganesh. 6)Depreciation on building at 7.5 % p.a.
  • 8. Mrs.Ganesh & Shripad Trading Account For the year ended 31st march 2009 Particulars Amt. Amt. Particulars Amt. Amt. To opening stock 44000 By sales 200000 To purchases 130000 (+)unrecorded 4000 204000 To Wages and sales salaries 12000 By goods taken To Trade for personal use- expenses 2400 shripad 2500 To gross profit 63100 By closing stock 45000 c/d 251500 251500
  • 9. Particulars Amt. Amt. Particulars Amt. Amt. To audit fees 6000 To Bad debts 3500 By Gross profit b/d 63100 +New bad debts 2000 +new R.D.D. 2850 ↔↔↔ 8350 -old R.D.D. 2100 6250 To Discount 1400 To dep.on Building 6000 To general exp. 1800 To unproductive wages 1900 To travelling exp. 4200 -personal 800 3400 To rent 4500 +o/s 1500 6000 To net profit transferred to capital accounts Ganesh 15175 Shripad 15175 30350 63100 63100
  • 10. Liabilities Amt. Amt. Assets Amt. Amt. Capital accounts Building 80000 Ganesh 70000 - depreciation 6000 74000 +net profit 15175 Patents 10000 ↔↔↔ 85175 Bills receivable 28000 -drawings (personal 800 84375 - dishonor 3000 25000 travelling) Shripad 70000 Cash at bank 11500 + net profit 15175 Sundry debtors 52000 ↔↔↔ + dishonored bill 3000 85175 + unrecorded sales 4000 - Drawings 2500 82675 ↔↔↔ Sundry creditors 55400 59000 Bills payable 10000 - New bad debts 2000 General reserve 28000 - New R.D.D.5% 2850 54150 O/s salaries 2700 Motor car 45000 O/s Rent 1500 Closing stock 45000 264650 264650