What is Final Accounts?
Final accounts is an obsolete bookkeeping system that mentions to the final trial balance during the closure of an accounting period from which the financial statements are obtained. This final trial balance comprises of all of the journal entries that are used to close the books, such as : payroll tax accruals and wage.
Final accounts of a partnership enterprise are outlined in the similar way as those outlined for a sole trading enterprise with just 1 difference which associates to the allocation of gain among the partners. After outlining the Trading and Profit and Loss A/c, the net profit or net loss is being transferred to an account called Profit and Loss Appropriation A/c. All modifications with respect of interest on drawings, interest on capital, partners’ share of profit and loss, partner’s salary, interest on partner’s loan, etc., are made via the Profit and Loss Appropriation A/c. This is done in order to distinct between the results of operations of business and the allocation of the gain among the owners. The preparation of final accounts and the Profit & Loss Appropriation a/c is elucidated with the help of example given below :
The above mentioned is the concept that is explained in detail about Final Accounts for the class 12 students. To know more, stay tuned to BYJU’S.