Final account ppt

This PPT is for Students of 11th, 12th and BBA. This ppt includes basic information for Final Account.

1. Final Account By Pratima Kaushik, Research Scholar

2. Index  Introduction Components Trading Account Profit and Loss Account Balance Sheet Practical Question Working Note 2

3. Final Account Final accounts are various accounts and statements that provides information related to progress of company It is full and final accounting statement which is carried out at the end of an accounting year. It derives reference from the trial balance . Balance Sheet, Profit and Loss Account, Trading Accounts of any company at the end of financial year are collectively known as Final Accounts . 3

4. Components of Final Account Trading Account Profit and Loss Account Balance Sheet 4

5. Trading Account This is the first account prepared to ascertain gross profit or gross loss incurred during an accounting period. This account records expenses which are related to manufacturing, factory, production expenses . It shows all debited sum such as purchase, opening stock and wages and direct expenses on the left hand side(LHS ). On the credit side (Right hand side),when net sales are greater than the values represented in LHF it shows gross profit. RHS>LHS = Gross Profit It provide Gross Loss when net sales are less than values represented in LHF. LHS>RHS = Gross Loss 5

6. Format of Trading Account 6

7. Items on debit side of Trading Accounts Opening Stock- It refers to the total cost of goods left unsold at the beginning of current accounting year. Purchases – Total cost of goods purchased both cash and credit. In case of purchase return net purchases are recorded in debit side after deducting from total purchase. Wages- It includes the amount paid to workers for manufacturing, loading, unloading of goods. Custom and import duty- It refers to the amount paid as custom and import duty when goods are imported. Carriage expenses 7

8. Profit and Loss Accounts Profit and Loss account shows all income and indirect expense related to business. On debit side it has indirect expenses such as administrative expenses, selling and distribution expenses occurred during an accounting year. On credit side it has all income received during an accounting year. Profit and Loss account represent net profit earned and net loss suffered during the year. 8

9. Format of Profit and Loss Account 9

10. Balance Sheet It is final statement that states the final financial position of the company. It enlists Assets on debit side and liabilities on credit side. Balance sheet is made at end of year on a particular date. 10

11. Format of Balance Sheet Balance Sheet As on _ _ _ _ 11 Liabilities Amount Assets Amount Capital (-) Drawing (+) Net Profit b/f Reserve and Surplus Bank overdraft Creditors Bank Loan Bills payable Outstanding expenses Total Land and Building Fixture and Furniture Plant and Machinery Debtors Bill receivable Cash at bank Cash in hand Prepaid expenses Closing stock Net Loss b/f Total

12. From the following trail balance of Awasthi & Brothers prepare Trading, P rofit and Loss Account and Balance Sheet for the year ended June 30 th,2019 Depreciation on furniture by 10%. A provision on doubtful debts is to be created to the extent of 5% on sundry debtors. Insurance amounting Rs 2000 is prepaid. Salary for the month of J une, 2019 amounting Rs. 3000 were unpaid which must be provided for. However, salaries included Rs. 2,000 paid in advance. Office expenses outstanding Rs. 8,000. Stock for private use Rs 6,000 and Closing Stock Rs. 60,000. 12

13. Awasthi & Bro. Trading account for the year ended 30 th ,June 2019 13 Particulars Amount Particular Amount Opening Stock Purchases 15,0000 (-)Purchase return 5,000 (-) Drawing 6,000 Wages Gross Profit c/d Total 50,000 1,39,000 20,000 1,62,000 3,71,000 Sales 3,21,000 Sales Return 10,000 Closing Stock Total 3,11,000 60,000 3,71,000 Dr. Cr .

14. Awasthi & Bro. Profit & Loss account for the year ended 30 th , June 2019 14 Particulars Amount Particular Amount Salaries 30,000 +Outstanding sal . 3,000 - Prepaid sal . (2,000) Rent Transportation out Printing and Stationary Insurance Exp. 12,000 -Prepaid 2,000 Office Exp. 12,000 + Outstanding 8,000 Dep. on furniture Provision for Bad debts New 10,000 - Old 6,000 Net Profit c/f to b/s Total 31,000 15,000 7,000 8,000 10,000 20,000 2,000 4,000 69,000 1,66000 Gross Profit b/d Interest earned Total 1,62,000 4,000 1,66,000 Dr. Cr.

15. Awasthi & Bro. Balance Sheet as on 30 th , June 2019 15 Liabilities Amount Assets Amount Owner equity: Capital 1,00,000 - Drawing 24,000 - Stock with drawl 6,000 70,000 + Net Profit b/f 69,000 Current Liabilities: Creditors Bank overdrafts Outstanding liabilities: Salaries Office expenses 1,39,000 1,20,000 2,000 3,000 8,000 Fixed and loan : Furniture 20,000 - Dep. 2,000 Current Assets: Debtors 2,00,000 Pro. for 10,000 d.debts Cl. Stock Prepaid expenses: Salaries Insurance 1,8000 1,90,000 60,000 2,000 2,000 Total 2,72000 Total 2,72,000

16. Working Note Cr. 1. Dep. A/c Dr 2,000 To Furniture A/c 2,000 (- from Furniture) 2. Provision on D. Debts Dr. 10,000 To Debtors A/c 10,000 (- from debtors.) 3. P & L A/c Dr. 11,000 To Outstanding Sal. 3,000 ( Liab . In B/S ) To Outstanding Office Exp. 8,000 ( Liab . In B/S ) 4. Prepaid Exp. Dr. 4,000 To Salary 2,000 (Assets in B/S) To Insurance 2,000 (Assets in B/s) 5. Drawing Dr. 6,000 To Capital A/c 6,000 (- from Capital) 16

17. Thank You 17