11.Financial Statement of Propritor Concern.pptx

Financial Statement of Propritor Concern

1. Financial Statements Of Proprietary Concern

2. INTRODUCTION Final Accounts Are Prepared To Achieve The Objectives Of Accountancy. A Businessman Is Interested To Know The Final Result Of The Business– Whether He Has Earned Profit Or Suffered Loss In That Particular Amounting Period. The Businessman Prepares Certain Financial Statements At The End Of Accounting Period. These Two Statements i.e. Trading And Profit And Loss Account And Balance Sheet Are Prepared To Give Final Results Of The Business, That Is Why Both These Are Collectively Called Final Accounts . 2 KP'S Group Tuition

3. COMPOSITION OF FINAL ACCOUNTS Trading Account Profit & loss Account Balance sheet 3 KP'S Group Tuition

4. Specimen Performa of Trading Account Dr Trading Account Of …….. For The Year Ending……... Cr Particulars To Opening Stock To Purchases Less: Purchase Return To Carriage /Freight To Cartage To Octroi/Custom Duty To Import Duty To Wages To Factory Rent To Factory Expenses To Motive Power Fuel Gas, Coal To Factory Lighting And Heating Amt. Particulars By Sales Less: Sales Return By Goods Distributed As Free Samples By Goods Withdrawn By Proprietor Personal Use By Goods Destroyed By Fire /Loss By Theft By Closing Stock By Gross Loss C/D* (Transfer to P & L A/c) Amt . 4 KP'S Group Tuition

5. To Royalties To Trade Expense To Gross Profit C/D* (Transfer to P & L A/c) 5 KP'S Group Tuition XXX XXX XXX

6. Specimen Performa of Profit and loss Dr Profit and loss Account Of …….. For The Year Ending……... Cr Particulars To Gross Loss B/D To Office salaries To office Rent To Printing and Stationery To Postage And Telegram To Audit Fees To Electricity To Commission paid To Discount allowed To carriage outward To Advertisement Amt. Particulars By Gross Profit B/D By Rent Received By Interest Received By Commission Received By Discount Received By Interest On Investment By Sundry Income By Profit On Sale Of Asset By Interest On Drawing By Interest On Partners Loan Amt . 6 KP'S Group Tuition

7. To Travelling and conveyance To Bank charges and interest on bank loan To Trade Expenses To Depreciation To Abnormal losses To loss on sale of assets To Bad Debts (+) New Bad Debts (+) New R.D.D ( - ) Old R.D.D To Net Profit Transferred To Capital Account By Discount On Creditors (+) New Discount On Creditors (+) New Reserve On Discount On Creditors ( - ) Old Reserve On Discount On Creditors To Net Loss Transferred To Partners Current Or Capital Account (Balancing Figure) 7 KP'S Group Tuition XXX XXX XXX

8. Specimen Performa of Balance sheet Balance sheet as on 31 st March…….. Liabilities Capital A/C Add: net Profit Add: Interest On Capital Less: Drawing Less: Interest On Drawing Less: Net Loss Bank Loan Bank Overdraft Sundry Creditors Bills Payable Outstanding Expense Pre Received Income Amt. Asset Cash In Hand Cash at Bank Bill Receivable Sundry Debtors (+) New Bad Debts (+) New R.D.D Goodwill Furniture Plant And Machinery Land And Building Motor Car/Vehicle Closing Stock Amt . 8

9. Total XX Total XX Contingent Liability XX Outstanding Income Prepaid Expense 9 KP'S Group Tuition Note: Balance Sheet Must Tally

10. MEANING OF ADJUSTMENT Those Transactions Which Relate To The Accounting Period For Which Financial Statements Are Being Prepared But Are Not Included In The Trail Balance Because These Transaction Have Not Yet Been Recorded In The Books Of Accounts Are Called “ADJUSTMENTS”. In Addition To It, Those Transactions Which Have Been Recoded In The Books Of Accounts But They Don't Relate To The Accounting Period For Which Accounts Are Being Prepared Are Also Called “Adjustments”. 10 KP'S Group Tuition

11. 1. CLOSING STOCK DR. Trading A/c Cr. Particulars Amt Particulars Amt. By Closing Stock **** Balance sheet Liabilities Amt. Assets Amt. Closing Stock **** 11 KP'S Group Tuition

12. 2. Depreciation (Machinery) DR. Profit & Loss A/c Cr. Particulars Amt Particulars Amt. To Deprecation On Machine *** Balance sheet Liabilities Amt. Assets Amt. Machinery **** Less : Depreciation *** **** 12 KP'S Group Tuition

13. 3. OUTSTANDING EXPENSE (WAGES) DR. Trading A/c Cr. Particulars Amt Particulars Amt. To Wages **** Add : Outstand. wages *** **** Balance sheet Liabilities Amt. Assets Amt. Outstanding Wages *** 13 KP'S Group Tuition

14. 4. PREPAID / ADVANCE EXPENSE (FACTORY RENT) DR. Trading A/c Cr. Particulars Amt Particulars Amt. To Factory Rent **** Less : Prep./ Adv. Rent *** **** Balance sheet Liabilities Amt. Assets Amt. Prepaid Factory Rent *** 14 KP'S Group Tuition

15. 5. Outstanding / Accrued Income DR. Profit & Loss A/c Cr. Particulars Amt Particulars Amt. By Interest Recd **** Add : O/stand Int. *** **** Balance sheet Liabilities Amt. Assets Amt. Outstanding Interest *** 15 KP'S Group Tuition

16. 6. PRE-RECEIVED/ADVANCE INCOME DR. Profit & Loss A/c Cr. Particulars Amt Particulars Amt. To Income **** Less : Adv. Income *** **** Balance sheet Liabilities Amt. Assets Amt. Advance Income *** 16 KP'S Group Tuition

17. 7.Drawings DR. Trading A/c Cr. Particulars Amt Particulars Amt. To Goods Withdrawn by Proprietor **** 17 Balance Sheet liabilities Amt Amt Assets Amt Amt Capital *** Less: Drawings *** **** KP'S Group Tuition

18. 8.Goods Distributed As Free Samples DR. Trading A/c Cr. Particulars Amt Particulars Amt. To Goods Distributed As Free Samples **** 18 DR. Profit & Loss A/c Cr. Particulars Amt Particulars Amt. To Advertisement **** KP'S Group Tuition

19. 9.Bad Debts and R.D.D DR. Profit & Loss A/c Cr. Particulars Amt Particulars Amt. To Bad Debts **** Add : New Bad Debt **** Add: New R.D.D **** *** Balance sheet Liabilities Amt. Assets Amt. Debtors **** ( - ) New Bad Debts **** ( - ) New R.D.D **** **** 19 KP'S Group Tuition

20. 10.Reserve on Discount on Debtors DR. Profit & Loss A/c Cr. Particulars Amt Particulars Amt. To Discount on Debtors **** Reserve for Discount on Debtors **** *** Balance sheet Liabilities Amt. Assets Amt. Debtors **** ( - ) Reserve For Discount On Debtors **** *** 20 KP'S Group Tuition

21. 11.Reserve on Discount on Creditors DR. Profit & Loss A/c Cr. Particulars Amt Particulars Amt. To Discount on Creditors **** Reserve For Discount On Creditors **** *** Balance sheet Liabilities Amt. Assets Amt. Creditors **** ( - ) Reserve For Discount On Creditors **** **** 21 KP'S Group Tuition

22. 12.Capital Expenditure included in Revenue Expenditure DR. Trading A/c Cr. Particulars Amt Particulars Amt. To wages **** Less : Machinery **** *** Balance sheet Liabilities Amt. Assets Amt. Machinary **** Add : Machinary **** *** 22 KP'S Group Tuition

23. Hidden Adjustments Hidden Adjustments Are Those Adjustments Which Appear In Trail Balance Itself. Information Of Such Adjustment Is Not Provided In The Sum. But Effect Are To Be Given As Adjustments. KP'S Group Tuition 23

24. 10% Bank Loan (1.10.2013) Rs 8,000 Calculation :Provide Interest @ 10%p.a For 6 Months From 1.10.13 to 31.3.14 = 8000 X 6/12 X 10/100 =Rs 400 KP'S Group Tuition 24 Dr . Profit & Loss A/c Cr. Particulars Amt Particulars Amt. Interest on Loan 400 Balance sheet Liabilities Amt. Assets Amt. Bank Loan 8,000 Interest on loan 400 8,400

25. Advertisement (for 3 years w.e.f.1.10.2013) Rs 6,000 Calculation: Provide Pre-paid Advertisement For 30 Months. In Current Year It Is Applicable For 1.10.2013 To 31.03.2014 i.e. for 6 Months = 6,000 X 30/36 = Rs 5,000 KP'S Group Tuition 25 Dr . Profit & Loss A/c Cr. Particulars Amt Particulars Amt. Advertisement 6,000 (-) Prepaid Advertisement 5,000 1,000 Balance sheet Liabilities Amt. Assets Amt. Prepaid Advertisement 5,000

26. Salary (10 Month) Rs 10,000 Calculation: Provide Outstanding salary For 2 Months Because Out Of 12 Months 10 Months Rent Is Paid. KP'S Group Tuition 26 Dr . Profit & Loss A/c Cr. Particulars Amt Particulars Amt. Rent 10,000 (+) Outstanding salary 2,000 12,000 Balance sheet Liabilities Amt. Assets Amt. Outstanding Salary 2,000