Submitted to submitted byDr. Nandan Amit sengar MBA student PIM Gwalior

Preparation of Final Accounts involve:Trading Account ( The objective is to ascertain the gross profit and gross loss of an organization during an accounting period.)

Profit and Loss account ( To ascertain net profit or net loss during an accounting period)

Balance Sheet ( It shows the financial position of the of a business by detailing the sources of funds and utilization of funds.)

Trading AccountParticulars Amount Particulars Amount

To Opening Stock By sales

To PurchasesLess Purchase Return

By Closing Stock

To Carriage Inwards

To wages

Gas, water and Fuel

Lighting and Heating

Factory Expenses

To Gross profit (IF)

Profit and loss AccountParticulars Rs Particulars Rs.

Management expenses (Admin. Salaries, Office rent and Taxes, Telephone, stationary, Insurance, audit fees, Legal Charges, Electricity)

By Gross profit b/d

Maintenance Expenses ( Repairs and Depreciation)

Other Income( dis., Comm. Recd.)

Selling and Distribution Expenses ( Advertisement, Carriage Outward, Bad Debts, Commission)

Non Trading Income ( Interest, rent, dividend)

Financial expenses ( Interest , Discount on bills)

Abnormal gains ( Profit on investment and sale of an \asset)

Abnormal Losses( Loss by fire, sale of an asset)

To Net Profit

Balance SheetRs Rs Rs

Fixed Assets: Land, Building, Plant and Machinery, FurnitureCurrent Assets: Stock, Debtors, Bills Receivable, Cash at Bank, Cash and HandCurrent Liabilities:Creditors, Bills Payable, Outstanding ExpensesWorking CapitalNet Asset Employed Financed By:CapitalAdd: Net Profit

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Treatment of Adjustments

Outstanding Expenses : ( due for accounting period but not paid) Add this amount in the particular expense either in trading or P&L A/c and show as Current Liabilities in Balance Sheet.

Prepaid Expenses: (Expenses paid in advance) Deduct this amount in the particular expense either in trading or P&L A/c and show as Current Assets in Balance Sheet.

Outstanding Income: (Income due in accounting period but still not received) Add this amount in the particular income in P&L A/c and show as Current Assets in Balance Sheet.

Income Received in advance: (Income received in advance by business before it being earned by the business.) Deduct this amount in the particular income in P&L A/c and show as Current Liabilities in Balance Sheet.

Depreciation: Show this amount in the P&L A/c and deduct form that particular fixed asset in the Balance Sheet.

Interest on Capital: Show this amount as Financial expense P&L A/c and added in capital in Balance Sheet.

Bad Debts and Provision for bad debts and discount on debtors

First, all the amounts of bad debts will be subtracted from total amounts of debtors

Provision for bad debts will be subtracted from the remaining amount of debtors

At last, discount on debtors will be subtracted from the last remaining amount of debtors

Debit side of profit and loss account

Conclusion Final accounting is an essential practice for

every enterprise to know the actual performance of the organization. All mature organization should necessary prepare final accounts of the organization for the effectiveness of business organization.

Thank you