Accounts Project 2

Only available on StudyMode
  • Download(s) : 343
  • Published : August 14, 2011
Open Document
Text Preview
Introduction to Financial Accounts

Final Accounts
Project Topic: - Final Accounts
Teacher: - Ms. Reshma Shaikh
College: - K.C. College
Class: -FYBMS
Roll No: - 54
Student Name: - Shabbir Mehta

What Is Final Accounts? The accounts & accounting statements prepared by a business concern at the end of the accounting year on the basis of trial balance & additional information to ascertain profit or loss of the business done during that accounting year are collectively called final accounts.

Index Page No. 1. Brief Overview…………………………….…… 3 2-Need & Importance of Final Accounts …………………….. 5 3. Pro Forma of Final Accounts………………………… 6 4. Bibliography …………………………………. 9 5.Thank You Note……………………………………………….. 9

Brief Overview In Final Accounts, two types of accounting statements are prepared, Viz.
Trading Account: - Trading account is a part of income statement, prepared on the basis of direct expenses & direct incomes of the business concern. Trading account is prepared for calculating the gross profit or gross loss of a business for a given period. Debit balance of trading account indicates gross loss & credit balance shows gross profit. The balance of trading account is carried to profit & loss account. Gross profit is transferred to the credit side of P & L A/C & gross loss is shown on debit side of P & L A/C. According to J.R. Batliboi, “The Trading Account indicates the results of buying and selling of goods. While preparing this account, the general establishment charges are ignored & only the transactions related to goods are included.” Profit & Loss Account: -Profit & Loss Account is a second part of income statement, prepared on the basis of indirect incomes & indirect expenses of the business concern. Profit & Loss Account is prepared to ascertain net profit earned or net loss suffered by a business concern during the accounting year. Debit balance of P & L A/C indicates net loss sustained whereas credit balance of P & L A/C shows net profit earned in a business activity. According to Prof. R.N. Carter, “A Profit & Loss Account is an account into which all gains and losses are considered in order to ascertain the excess of gain over the losses or vice –versa.” Balance Sheet: -the Balance Sheet is not an account but a statement showing the financial position of a firm, as on a given date in the form of assets & liabilities. On the left hand side of the balance sheet closing balances of all types of liabilities are shown & on the right hand side closing balances of all types of assets are shown. A. Palmer, has defined the term Balance Sheet as, “A statement on a particular date showing on one side the trader’s property & possessions & on the other hand the liabilities.” Trial Balance: -Trial Balance is a list of balances of various ledger accounts. It is prepared at the end of the accounting year. It includes all closing balances of various ledger accounts maintained in the book of account of a firm. Thus, Trial Balance is not an account but a statement showing the list of balances of all ledger accounts. When Trial Balance agrees or tallies, it ensures arithmetical accuracy of accounts kept in the book of accounts. Final accounts are usually prepared on the basis...
tracking img