Final Accounts of a Company

Final Accounts Meaning

Final accounts are those accounts that are prepared by a joint stock company at the end of a fiscal year. The purpose of creating final accounts is to provide a clear picture of the financial position of the organisation to its management, owners, or any other users of such accounting information.

Final account preparation involves preparing a set of accounts and statements at the end of an accounting year. The final account consists of the following accounts:

  1. Trading and Profit and Loss Account
  2. Balance Sheet
  3. Profit and Loss Appropriation account

Objectives of Final Account preparation

Final accounts are prepared with the following objectives:

  1. To determine profit or loss incurred by a company in a given financial period
  2. To determine the financial position of the company
  3. To act as a source of information to convey the users of accounting information (owners, creditors, investors and other stakeholders) about the solvency of the company.

The format of a final account is represented as follows:

Q. Following is the Trial Balance of Rajesh Ltd., Gurgaon as on 31.12.2009.

final-accounts-question

Adjustments:
1. Transfer Rs. 10000 to Reserve Fund.
2. Provide depreciation on building at 5%.
3. Stock on 31.12.2009 was valued at Rs. 12000.
4. Dividend at 15% on share capital is to the provided.
5. Depreciation on Plant and Machinery at 10%.

Prepare Trading, Profit and Loss Account, Profit and Loss Appropriation Account and Balance Sheet in the prescribed form.

Solution:

The solution will be as follows:

trading-and-profit-and-loss-account

profit-and-loss-appropriation-a/c

 

 

balance-sheet-final-accounts

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.

11 Comments

  1. ok its very nice.

  2. Manikandan Kanagaraj

    It’s a very useful to me. Thanks

  3. Really helpful 👍

  4. Prachi salunkhe

    Thanks mam its very usefull to learn 👍

  5. It’s very helpful to me. Thanks

  6. Very helpful for me thank you so much.

  7. Very helpful for me thank you

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