Final Accounts
· Final accounts are prepared at the end of accounting year.
· It consists of
a) Trading Account
b) Profit and Loss Account
c) Balance Sheet
· Basically, by preparing a trading account, you will get a gross profit or gross loss, from profit and loss account you will get a net profit or net loss, and from balance sheet you will get back your accounting equation (A = L + C).
· (Trading Account) + (Profit and Loss Account) = Income Statement. This is another version of final accounts. Instead of separately prepare the Trading Account and Profit and Loss Account, you can also combine them into one bigger version of statement to become an Income Statement. In this format, we are still using the same format as we used in preparing the Trading Account and Profit and Loss Account.
a) The format of Trading Account
Trading Account for the year ended ……………………………….. | |||
Sales | XXX | ||
Less: Sales Returns | (XXX) | XXX | |
Less: Cost of Goods Sold | |||
Opening Stock | XXX | ||
Add: Purchases | XXX | ||
Less: Purchases Returns | (XXX) | XXX | |
Wages | XXX | ||
Carriage Inwards | XXX | ||
Custom Duties | XXX | ||
XXX | |||
Less: Ending Stock | (XXX) | (XXX) | |
GROSS PROFIT | XXX |
b) The format of Profit and Loss Account
Profit and Loss Account for the year ended ………… | |||
GROSS PROFIT | XXX | ||
Add: Revenues | |||
Commission Received | XXX | ||
Rent Received | XXX | XXX | |
XXX | |||
Less: Expenses | |||
Insurance | (XXX) | ||
Rent | (XXX) | ||
Salaries | (XXX) | ||
General Expenses | (XXX) | (XXX) | |
NET PROFIT | XXX |
c) The format of Income Statement
Income Statement for the year ended ……………………………….. | |||
Sales | XXX | ||
Less: Sales Returns | (XXX) | XXX | |
Less: Cost of Goods Sold | |||
Opening Stock | XXX | ||
Add: Purchases | XXX | ||
Less: Purchases Returns | (XXX) | XXX | |
Wages | XXX | ||
Carriage Inwards | XXX | ||
Custom Duties | XXX | ||
XXX | |||
Less: Ending Stock | (XXX) | (XXX) | |
GROSS PROFIT | XXX | ||
Add: Revenues | |||
Commission Received | XXX | ||
Rent Received | XXX | XXX | |
XXX | |||
Less: Expenses | |||
Insurance | (XXX) | ||
Rent | (XXX) | ||
Salaries | (XXX) | ||
General Expenses | (XXX) | (XXX) | |
NET PROFIT | XXX |
d) The format of Balance Sheet
Balance Sheet as at ……………………….. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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