The document provides an overview of final accounts preparation, including trading accounts, profit and loss accounts, and balance sheets, detailing their components and adjustments necessary for accurate financial reporting. Key objectives include determining profit or loss from business operations and understanding the financial position at year-end. Adjustments such as closing stock, outstanding expenses, and depreciation are discussed to illustrate their impacts on the final accounts.

1. Final Accounts,
with Adjustments

2. Group Members
• H.M Amir Sharif Chishti
• Usman Ghani
• Amir Khalid
• Rizwan Javed

3. Objectives
Intro to Final Accounts & their preparation
Items used in Trading A/c
Items used in Profit/Loss A/c
Items used in Balance Sheet
Final A/c with adjustments
 Closing Stock
 Outstanding Expense
 Prepaid Income
 Accrued income
 Income Received in advance
 Depreciation
 Interest on Capital
 Interest on Drawing

4. Final Accounts
•BASIC OBJECTIVE
1. Trading account , Profit & Loss account - to know
profit or loss as a result of operations of business during
the previous year.
2. Balance Sheet - to know the financial position at the
end of the accounting year. also known as FINANCIAL
STATEMENTS.

5. NECESSARY FOR FINAL A/C
•Prepared from Trial Balance
 For this purpose both the sides of Trial Balance
must tally.
 If Trial Balance does not tally, Suspense Account
must be opened for this purpose and put on the
Dr. side or Cr. side(side having short total) as
the case may be.

6. COMPOSITION OF FINAL ACCOUNTS
These are called final accounts

7. Trading Account
Prepared by trading concerns i.e., concerns
which purchase and sell finished goods.
To know the gross profit /loss.
Gross profit /loss is the difference between the
cost of goods sold and the proceeds of their sale. If
the sale proceeds exceed the cost of goods sold
,the result is gross profit .Other wise, there is
gross loss.

8. Trading Account

9. Profit & Loss Account
Prepared to know the net profit/loss of business
during a particular accounting year.
Gross profit or loss is adjusted keeping in view the
indirect expenses like administrative, selling and
distribution and any other expenses and incomes to
find out net profit or net loss.

10. Profit & Loss Account

11. Balance Sheet
The last of financial statements .
Shows the financial position of the business at the
end of the accounting year i.e. balances of capital,
liabilities & assets.
All nominal accounts are closed by transferring
these to Trading & Profit & Loss Account.
Only personal & real accounts are left for Balance
Sheet.

12. Balance Sheet

13. Adjustments
Transactions occurring after preparing Trial
Balance, that must be considered while preparing
Final Accounts.
GOLDEN RULE: All the items appearing in the
Trial Balance are to be entered at one place out of
these three, ITEMS IN ADJUSTMENT are to be
treated at two places.

14. Adjustment item 1st Effect 2nd Effect
Closing Stock
Credit side of Trading
a/c
Assets side of Balance
Sheet
Outstanding
Expenses
Debit side of Trading
and Profit & Loss a/c by
way of addition to
expenses
Liabilities side of Balance
Sheet
Prepaid Expenses
Debit side of Trading
and Profit & Loss a/c by
way of deduction from
Expenses
Assets side of Balance
Sheet
Contd…

15. Adjustment item 1st Effect 2nd Effect
Accrued Income
(income earned but not
received)
Credit side of profit & loss
a/c by way of addition to
income
Assets side of Balance Sheet
Income Received in
Advance (income
received but not
earned in the financial
year)
Credit side of Profit & loss
a/c by way of deduction
from the income
Liabilities side of the Balance
Sheet
Depreciation
Debit side of Profit & Loss
a/c
Assets side of Balance Sheet by
way of deduction from the
value of concerned asset.
Contd…

16. Adjustment item 1st Effect 2nd Effect
Interest on Capital
Debit side of Profit &
Loss a/c
Liabilities side of the Balance
Sheet by way of addition to
the capital.
Interest on Drawings
Credit side of Profit &
Loss a/c
Liabilities side of Balance
Sheet by way of addition to
the drawings which are
deducted from the capital.

17. We just Discussed!
Financial Accounts
Trading A/c
Profit/Loss A/c
Balance Sheet
Final A/c with adjustments
 Closing Stock
 Outstanding Expense
 Prepaid Income
 Accrued income
 Income Received in advance
 Depreciation
 Interest on Capital
 Interest on Drawing

18. Thank You