final-accounts.ppt financial accounting.

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1. FINAL ACCOUNTS
Explained By:
SarbjitKaur.
Lecturer, Department of Computer Application,
PGG.C.G., Sector: 42, Chandigarh

2. FINAL ACCOUNTS
•FinalAccountsisthelaststepintheaccounting
process.TrialBalanceispreparedattheendofall
theaccountingyeartoknowthebalancesofall
theaccounts&totestthearithmeticaccuracyof
accounts.Butthebasicobjectiveofaccountingis
toknowabouttheprofitorlossduringthe
previousyear&presentfinancialposition.This
canbeknownonlyifTradingaccountandProfit&
LossaccountandBalanceSheetarepreparedat
theendpfyear.Thesearealsoknownas
FINANCIALSTSTEMENTSwhichareprepared

3. From Trial Balance. Final Accounts include the
preparation of :
1) Trading and Profit & Loss account and
2) Balance Sheet
as these two statements are prepared to give
the final results of the business, both of these
are collectively called as final accounts.
Accounting cycle finally ends with these
statements as shown in next slide:

4. Entry in the books of
Original Entry
(ORIGINAL RECORD)
Posting in the concerned
Ledger account
(CLASSIFICATION)
Preparation of
Trial Balance
(CHECKING THE
ACCURACY)
Balancing of Real &
Personal accounts
Preparation of final accounts
(summary)
ACCOUNTING CYCLE
TRANSACTIONS

5. Types of Financial Statement
Final accounts or financial statements can be
divided in two parts:-
1)Trading and Profit & Loss Account
2)Balance Sheet

6. Trading Account
•Tradingaccountispreparedbytrading
concernsi.e.,concernswhichpurchaseand
sellfinishedgoods,toknowthegrossprofitor
grosslossincurredbythemfrombuyingand
sellingofgoodsduringaparticularperiodof
time.Grossprofitorgrosslossisthe
differencebetweenthecostofgoodssoldand
theproceedsoftheirsale.Ifthesaleproceeds
exceedthecostofgoodssold,grossprofitis
made.Otherwise,grosslossismade.

7. Specimen Proforma of Trading Account
Dr Trading Account of …….. For the year ending……... Cr
Particulars Amt.Particulars Amt.
To Opening Stock
To Purchases
Less: Returns
To Direct Expenses:
Carriage Inward
Wages
Wages & salaries
Fuel & power
Coal, water & gas
Octroi
By Sales
Less: Returns
By Closing Stock
By Gross Loss c/d*

8. Profit & Loss Account
•Fornon-corporatebusinessorganisationProfit&
Lossaccountissecondpartofincomestatement.
Itispreparedtoknowthenetlossofbusiness
duringaparticularperiod.Everybusinessmanhas
tospendonexpensesotherthanonmanufacture
orpurchaseofgoodswhicharecalledindirect
expenses.Therecanbeotherincomesexcept
sales.Sogrossprofitorlossisadjustedkeepingin
viewtheseindirectexpensesandotherincomes
tofindoutnetprofitornetloss.

9. Proforma of Profit & Loss Account
Particulars Amt.Particulars Amt.
Particulars
To Gross Loss b/d
To Establishment Charges
To Administrative Charges
To Selling & Distribution
expenses
To Financial Charges
Particulars
By Gross Profit b/d
By other expenses
By Net Loss
(transferred to capital
account)

10. Balance Sheet
BalanceSheetisacomponentoffinancialstatements
whichshowsbalancesofcapital,liabilities&assets.All
nominalaccountsareclosedbytransferringtheseto
Trading&Profit&LossAccount.Onlypersonal&real
accountsareleft.
BalanceSheetisthefinalphaseinaccountingcycle.Itis
a‘mirror’whichreflectsthetruepositionoftheassets
&liabitiesofthebusinessonaparticulardate.
“Astatementoffinancialpositionofeconomicunit
disclosingasatagivenmomentoftimeitsassets,
liabilities&ownershipequities.EricL.kohler

11. Balance Sheet as on
……………………
Liabilities
Capital
Amt. Assets
Fixed Assets:
Amt.
Add: Net Profit
Less: Drawings
Fixed Liabilities:
Long term loan
Public deposits
Current Liabilities:
Unexpired Income
Short Term Loans
Trade Creditors
Bank Overdraft
Goodwill
Land and Buildings
Plant & Machinery
Motor Vehicles
Furniture
Patents & Trade Marks
Live Stock
Loose Tools
Investments

12. Thanks you