Steps of preparing Final Accounts is -
(a) Trading Account
(b) Profit and Loss Account
(c) Balance Sheet

True

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False

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Solution

The correct option is A True
Final accounting is the last step of accountancy in any business. It involves three series of steps or three accounts, Trading account, Profit and Loss account and then Balance sheet. This order must remain same under any situation.
The order of preparing accounts must be same because first gross profit/loss has to be calculated and then only net profit/loss will be calculated and after that all assest and liablilities will be presented. Hence, the statement is true.

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Similar questions

Trading & Profit & loss account and balance sheet is prepared from:

State whether the following statement are true or false.

1. Final Accounts are prepared on the basis of Trial Balance.
2. Trading Account is a part of Profit & Loss Account.
3. Profit Loss Account is prepared to find out Gross Profit or Gross Loss.
4. Gross Profit or Gross Loss is transferred to Balance Sheet.
5. An amount of net profit is added to the capital.
6. All indirect expenses are debited to trading account.
7. Balance Sheet is a statement and not an account.
8. Capital account is a personal account.
9. Amount of prepaid expenses appears on assets side.
10. Bank Overdraft is a liability of business concern.

A Statement of Affairs is similar to the :

(a) Balance sheet
(b) Trial balance
(c) Trading Account
(d) Profit & Loss Account

Q. The final accounts of a manufacturing company generally include the following statements.
i) Balance Sheet
ii) Manufacturing Account
iii) Profit and Loss Account
iv) Trading Account
v) Profit and Loss Appropriation Account.
The correct sequence in which the statements are prepared is?

Q. Following is the Trial Balance as on 31st March 2016. Prepare Trading and Profit and Loss Account and Balance Sheet :-

Particulars	Debit (₹)	Credit (₹)
Stock (1st April 2015)	8,000
Sales		2,20,000
Purchases	1,26,000
Productive Wages	56,500
Salaries	16,000
Stores Consumed	6,050
Carriage	3,050
Rent and Rates	5,200
Insurance	1,320
Machinery	52,000
Building	67,000
Capital less Drawings		1,45,600
Sundry Debtors	44,000
Sundry Creditors		20,000
Secured Loan		15,000
Furniture	3,350
General Expenses	2,600
Cash in hand	1,930
Bad Debts	1,020
Bank	6,580
Total	4,00,600	4,00,600
Total

Additional Information :
(a) Stock on 31st March 2016 is ₹ 20,600.
(b) Depreciate machinery @ 10% p.a.
(c) Make a Provision @ 5% for Doubtful Debts.
(d) Provide

2 \frac{1}{2} %

for discount on sundry debtors.
(e) Rent and Rates include security deposit of ₹ 400.
(f) Insurance prepaid ₹ 120.

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Steps of preparing Final Accounts is -(a) Trading Account (b) Profit and Loss Account(c) Balance Sheet

Steps of preparing Final Accounts is -
(a) Trading Account
(b) Profit and Loss Account
(c) Balance Sheet