Final Accounts

TRADING ACCOUNT:

             The first step in the preparation of final accounts is the prepareation of the Trading account, the trading is an account, which shows the result buying and selling of goods. The difference between the debit and credit side totals of the trading account gives gross loss. It is necessary to include all direct expenses and direct income also.

Expenses                                        Income

Opening Stock                               Sales

Purchase                                         Sales Returns

Purchase Return                             Closing Stock

All Manufacturing Expenses

CALCULATION OF GROSS PROFIT/ GROSS LOSS

Gross Profit = Sales - Cost of Goods Sold

Gross Loss = Cost of Goods sold - sales

PROFIT AND LOSS ACCOUNTS

             Profit & Loss account is an account designed to certain the net profit or net loss incurred by a business concern during an accounting period. Profit & Loss Account begins with the gross profit or gross loss brought down from the trading with all incomes and gain of revenue nature.

Expenses:

Salary, Audit Fee, Rent and Rate, Advertising, etc.

Incomes:

Interest Received, Discount Received, Commission Received, etc.

BALANCE SHEET

             Balance Sheet is a statement of assets and liabilities of a business prepared with a view to ascertain the financial position of the particular date. The after preparation of trading and profit and loss account is balance sheet prepared at the end accounting period. A balance sheet has two sides.

Left side known as Liability side.

Right side known as Asset side