Final Accounts Format PDF

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Final Accounts Format

Final accounts give an idea about the profitability and financial position of a business to its management, owners, and other interested parties. All business transactions are first recorded in a journal. They are then transferred to a ledger and balanced. These final tallies are prepared for a specific period.

The preparation of a final accounting is the last stage of the accounting cycle. It determines the financial position of the business. Under this, it is compulsory to make a trading account, a profit and loss account, and a balance sheet. The term “final accounts” includes the trading account, the profit and loss account, and the balance sheet.

Legal Provisions

Sections 209 to 220 of the Indian Companies Act 2013 deal with legal provisions relating to the preparation and presentation of final accounts by companies.

Section 210 deals with the preparation of final accounts by companies, while section 211 deals with the form and contents of the balance sheet and the profit and loss account.

Trading Account

A trading account shows the results of the buying and selling of goods. This sheet is prepared to demonstrate the difference between the selling price and the cost price.

The trading account is prepared to show the trading results of the business, e.g. gross profit earned or gross loss sustained by the business.

It records the direct expenses of a business firm. According to J.R.Batlibboi- “The Trading Account shows the result of buying and selling goods.

In preparing this account, the general establishment charges are ignored and only the transactions in goods are included.

What is a Profit and Loss Statement (P&L)?

The profit and loss (P&L) statement is a financial statement that summarizes the revenues, costs, and expenses incurred during a specified period, usually a fiscal quarter or year. The P&L statement is synonymous with the income statement.

These records provide information about a company’s ability or inability to generate profit by increasing revenue, reducing costs, or both.

Some refer to the P&L statement as a statement of profit and loss, income statement, statement of operations, statement of financial results or income, earnings statement, or expense statement.

P&L management refers to how a company handles its P&L statement through revenue and cost management. The P&L statement is a financial statement that summarizes the revenues, costs, and expenses incurred during a specified period.

The P&L statement is one of three financial statements every public company issues quarterly and annually, along with the balance sheet and the cash flow statement.

It is important to compare P&L statements from different accounting periods, as the changes in revenues, operating costs, R&D spending, and net earnings over time are more meaningful than the numbers themselves. Together with the balance sheet and cash flow statement, the P&L statement provides an in-depth look at a company’s financial performance.

Difference Between Profit and Loss & Profit and Loss Appropriation Account

The profit and loss appropriation account is an extension of the profit and loss account itself, however, there is a fundamental difference between profit and loss & profit and loss appropriation account.

By definition, a P&L account or Income statement is one of the three financial statements of an organization that summarizes revenues and expenses to ascertain net profit or a net loss of the organization for a specific time period.

By definition, a P&L appropriation account is used to demonstrate the division or allocation of profit/losses among the owners.

Language English
No. of Pages37
PDF Size1.5 MB

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