BOOK KEEPING & ACCOUNTANCY

BOOK KEEPING & ACCOUNTANCY11. FINANCIAL STATEMENTS OF PROPRIETORY CONCERN (Adjustments & their effects)1Ajay Janardan Gursale. ( M.Com.B.Ed.)

Udyogshri Prabhakar Laxman Patil Junior College of Science, Commerce & Arts. Kharepatan,Tal.- Kankavli, Dist.- Sindhudurg.

FINAL ACCOUNTSDEFINITION : Final accounts are the financial statements prepared at the end of the financial year to disclose the financial position of the business concern.Ajay Janardan Gursale. ( M.Com.B.Ed.)2

Objectives of Final AccountsTo know profit or loss during the accounting period.To know the amount of assets & liabilities of business.To know the capital or equity in the business.To know the debtors & creditors in the business.To know the liquidity in the business.To calculate different ratios in the business to maintain efficiency of the business.

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Importance of Final AccountsTo ascertain gross profit or gross loss for accounting period.To ascertain net profit or net loss for acconuting period.To ascertain closing stock of the business.To ascertain current assets or current liabilities in the business.To ascertain Proprietors Equity.

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Ajay Janardan Gursale. ( M.Com.B.Ed.)5STEPS FOR PREPARATION OF FINAL ACCOUNTS

Ajay Janardan Gursale. ( M.Com.B.Ed.)6PURPOSE OF PREPARATION OF FINAL ACCOUNTS

GROSS PROFIT = Direct Income Direct ExpensesGROSS LOSS = Direct Expenses Direct IncomeAjay Janardan Gursale. ( M.Com.B.Ed.)7Trading Account : Trading Account is prepared to find out gross profit or gross loss on the basis of direct expenses or direct income of the business.

NET PROFIT = Indirect Income Indirect ExpensesNET LOSS = Indirect Expenses Indirect IncomeAjay Janardan Gursale. ( M.Com.B.Ed.)8Profit & Loss Account : Profit & Loss Account is prepared to find out net profit or net loss on the basis of indirect expenses or indirect income of the business.

Assets = Fixed Assets + Current AssetsLiabilities = Fixed Liabilities + Current LiabilitiesAjay Janardan Gursale. ( M.Com.B.Ed.)9Balance Sheet : Balance sheet is a statement showing financial position of the business on a particular date in terms of assets & liabilities.

1. CLOSING STOCKDR. Trading A/c Cr.ParticularsAmtParticularsAmt.By Closing Stock****

Balance sheetLiabilitiesAmt.AssetsAmt.Closing Stock****

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2. OUTSTANDING WAGESDR. Trading A/c Cr.ParticularsAmtParticularsAmt.To Wages****Add : Outstand. wages*******

Balance sheetLiabilitiesAmt.AssetsAmt.Outstanding Wages***

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3. OUTSTANDING SALARYDR. Profit & Loss A/c Cr.ParticularsAmtParticularsAmt.To Salary****Add : Outstand. Salary*******

Balance sheetLiabilitiesAmt.AssetsAmt.Outstanding Salary***

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4. PREPAID / ADVANCE FACTORY RENTDR. Trading A/c Cr.ParticularsAmtParticularsAmt.To Factory Rent****Less : Prep./ Adv. Rent*******

Balance sheetLiabilitiesAmt.AssetsAmt.Prepaid Factory Rent***

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5. PREPAID / ADVANCE OFFICE RENTDR. Profit & Loss A/c Cr.ParticularsAmtParticularsAmt.To Office Rent****Less : Prepaid offi. Rent*******

Balance sheetLiabilitiesAmt.AssetsAmt.Prepaid Office Rent***

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6. PREPAID INSURANCE (Exp.)DR. Profit & Loss A/c Cr.ParticularsAmtParticularsAmt.To Insurance****Less : Prepaid Insurance*******

Balance sheetLiabilitiesAmt.AssetsAmt.Prepaid Insurance***

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7.Deffered Advertisement Exp.DR. Profit & Loss A/c Cr.ParticularsAmtParticularsAmt.To Advertisement Exp****Less : Deff.Advt.Exp*******

Balance sheetLiabilitiesAmt.AssetsAmt.Deferred Advt. Exp ****

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8. Outstanding / Accrued Income DR. Profit & Loss A/c Cr.ParticularsAmtParticularsAmt.By Interest Recd****Add : O/stand Int.*******

Balance sheetLiabilitiesAmt.AssetsAmt.Outstanding Interest***

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9. Advance IncomeDR. Profit & Loss A/c Cr.ParticularsAmtParticularsAmt.To Income****Less : Adv. Income*******

Balance sheetLiabilitiesAmt.AssetsAmt.Advance Income***

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10. Depreciation on Machinery (Fixed Asset)DR. Profit & Loss A/c Cr.ParticularsAmtParticularsAmt.To Depre. On Machine.***

Balance sheetLiabilitiesAmt.AssetsAmt.Machinery****Less : Depreciation*******

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14. Goods withdrawn by Proprietor.DR. Trading A/c Cr.ParticularsAmtParticularsAmt.By Goods withdrawn by****Proprietor

Balance SheetLiabilitiesAmountAssetsAmountCapital A/c****To Drawing a/c*******

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15. Goods distributed as free sample.DR. Trading A/c Cr.ParticularsAmtParticularsAmt.By Goods distributed ****as free sample

Profit & Loss A/cLiabilitiesAmountAssetsAmountTo Advertisement A/c***(Free Sample)

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16.Adjustments for Sundry DebtorsDR. Profit & Loss A/c Cr.ParticularsAmtParticularsAmt.To Bad Debts (Old)****Less : Deff.Advt.Exp*******

Balance sheetLiabilitiesAmt.AssetsAmt.Deferred Advt. Exp ****

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Dr. Trading A/c Cr.ParticularsAmtParticularsAmt.To Opening Stock****By Sales A/c****To Purchases A/c****Less :Sales Return*******Less : Purchase Return*******By Goods distributedTo Wages****As free sampleTo Factory Rent****By Goods withdrawn****To Power & fuel****by proprietorTo Lighting & Heating****By Closing Stock****To Octroi Duty****To Carriage Inward****To Cartage****To Works Manager salary****To Freight A/c****To Dock ChargesTo Import Duty

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Dr. Trading A/c Cr.ParticularsAmtParticularsAmt.To Royalty A/cBy Sales A/c****To Power, fuel, Oil A/cLess :Sales Return*******To Coal, Gas Water A/cBy Goods distributedTo Freight Inward A/cAs free sampleTo Factory Insurance A/cBy Goods withdrawn****To Motive Power A/cby proprietorTo Trade Expenses a/cBy Closing Stock****To Gross Profit A/c****To Gross Loss A/c****( Trf. to P&L A/c Cr.Side)( Trf. to P&L A/c Dr.Side)********

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Dr. Profit & Loss A/c Cr.ParticularsAmtParticularsAmt.To Gross Profit A/c****To Gross Loss A/c****( Trf. to P&L A/c Cr.Side)( Trf. to P&L A/c Dr.Side)To Salaries A/c****To Salaries & Wages A/c****To Unproductive Wages A/c****To Office Expenses A/c****To General Expenses A/c****To Sundry Expenses A/c****To Postage & Stationery A/c****To Telephone Charges A/c****To Electricity Charges A/c****To Legal Charges A/c****To Audit Fees A/c****To Bank Charges A/c****

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Dr. Profit & Loss A/c Cr.ParticularsAmtParticularsAmt.To Interest Paid A/cTo warehouse Rent A/cTo Rent, Rates & Taxes A/cTo Insurance A/cTo Trade Expenses A/cTo Travelling Exp.A/cTo Discount Allowed A/cTo Advertisement A/cTo Export Duty A/cTo Carriage O/w A/cTo Conveyance A/cTo Net Profit A/c****( Trf. to P&L A/c Cr.Side)********

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