However, item such as Returns Inward which appears on the debit side of the trial balance is shown on the credit side of the Trading Account as deduction from sales. However, Returns Outward account although shows credit balance and appears on the credit side of the trial balance is shown on the debit side of Trading Account as a deduction from Purchases. Drawings account, although appears on the debit side of the trial balance, is shown as a deduction from Capital on the Liabilities side of the Balance sheet. These are to be considered by adjusting the items of expenses, losses, assets, drawings, incomes, liabilities or capital as applicable while preparing the Final Accounts. Adjustments requires both the Trading and Profit and Loss Account and the Balance Sheet depending on the nature of the adjustment. Sometimes an adjustment may have effects on both sides of the balance sheet only. For example, credit purchase of asset omitted to be recorded in the books. Gross profit generated from carrying on the basic activity of a business. The basic activity of a business comprises of buying and selling of goods. The excess of revenue generated over cost of manufacture or purchase of goods is known as gross profit. In other words, gross profit is the excess of Net Sales over the cost of goods sold. This is explained as under:. Purchases includes goods which have been bought for resale. The amount of purchases appearing in the trial balance includes cash purchases as well as credit purchases. Purchases account shown debit balance and hence it appears on the debit side of the Trial balance. While preparing the final account, it is shown on the debit side of the Training Account. There are two ways of showing purchase returns in the Trading Account. It may be shown by way of deduction from Purchases on the debit side of the Trading Account or it may be shown on the Credit side of the Trading Account. However, normally it is shown by way of deduction from Purchases in order to show the figure of net purchase in the Trading Account. In case of a trading concern, all expenses incurred in purchasing with goods, bringing them to the godown and into saleable condition account treated as direct expenses and charged to trading account. For example, carriage inward, freight, wages etc. In case of manufacturing concern, cost of converting the raw materials into finished products form part of direct expenses. Direct expenses to be debited to trading account include the following: Wages are paid to workers who are engaged in the production of goods and as such are debited to the trading account. While preparing Trading Account, it should be noted that: Carriage or Carriage Inward or Freight is the expenses which are paid for bringing the goods to the shop or to the factory and hence should be debited to trading account. However, if any carriage or freight is paid for carrying charge of an asset, the amount should be added to the asset account and should not be debited to trading account. Manufacturing Expenses such as Coal, Gas, Fuel, Water, Power, Factory Rent, Factory Lighting etc. Dock Charges are the charges levied on ships and their cargo while entering or leaving docks. If dock charges are paid on import of goods they are shown on the debit side of trading account. If dock charges are paid on export of goods they are shown on the debit side of the Profit and Loss account. In the absence of specific instructions, these are debited to trading account. Custom Duty is paid on import and well as with export of goods. Custom duty when paid on the purchase of goods is charged to trading account and when it is paid on the sale of good it is charged to profit and loss Account. Excise Duty is the format of duty or charges paid to the government on goods manufactured and is, therefore, debited to the trading account. Octroi is the amount levied by the municipal authority when and goods enter the city and hence debited to trading account because they are connected with purchases. Royalty is the amount paid to the owner of a mine or patent for using his right or patent. Where the payment of royalty is based on production, it is usually charged to trading account because it increases the cost of production. However, if and is specifically started in the problem that the Royalty is payable on the basis of sales, it will be charged to Profit and Loss Account. This is so because its valuation is made after the accounts have been closed. It is incorporated in the books by means of the following entry: Closing stock account will be posted to the credit side of the trading account and on the other hand, debit aspect of the closing stock account will be shown on the Asset Side of the Balance Sheet, in order to complete the double entry. Sometimes, the Closing Stock loss be given inside on the debit side the Trial Balance. This means and the entry for incorporating the closing stock in the books has already been passed. It implies that the Closing Stock must have been deducted out of Purchases Account. Hence, in such a case, Closing Stock will not be shown in the Trading Account but will appear only on the Assets side of the Profit Sheet. Again, the Closing Stock may be given both on the debit side and credit side profit the Trial Balance. In such a case, the debit balance will be shown on the asset side of the balance sheet and the balance appearing on the credit will be shown on the credit side of the Trading Account. Closing stock should be valued either with cost or market price whichever is lower and should be recorded accordingly. While preparing final account, if the figure of both cost price and market price of the closing stock is given, the closing stock will be with both in the trading account and the balance sheet either at the cost price or market price whichever is lower. For example, the cost price of stock held by a trader on is Rs. Journal Entries Closing entries relating to preparation of Trading Account. The preparation of the Trading Account requires that the balances of all such accounts which are due to appear in the Trading Account are transferred to it. The entries required for such transfer are termed as closing entries. These will be as follows: The balance of purchases return account is transferred to purchases account or Trading account. After passing the above entries, if the total of amounts of the credit side of the Trading Account exceeds the total of amounts of debit side, the difference is termed as Gross Profit. The Gross Profit will be transferred to the credit of a newly opened loss called Profit and Loss account. The following entry is passed for the same: If the total of amounts of debit side of the Trading Account exceeds the total of amounts of the credit side, the difference will be termed as Gross Loss. It will be transferred to the debit of Profit and Loss Account by means of the following entry: Trading Account For the year ended on Excercise: Selling and Distribution Expenses: To Carriage Outwards, or Carriage on Sales To Advertisement To Commission To Discount To Rebate To Brokerage To Bad debts To Export duty To Packing charges. To Delivery Van Expenses To Wages Unproductive To Commission to Sales Manager Financial Charges: With Interest on Loan To Bank Charges To interest on Overdraft Sundry Expenses: To Sales Tax To Repairs To Depreciation on fixed assets To Entertainment Expenses To Contingencies To Conveyance Expenses To Donation and Charity To Loss on Sale of Assets Provisions: The stock of goods remains unsold at the end of the last year is termed as the opening stock of the current year. Handiqui Administration Authorities Governance Programmes Doctoral Degree Masters And Bachelors Degree PG Diploma Diploma Certificate BPP Programme Admission Admission Procedure Eligibility Fee Structure Photo Gallery Contact Us. Preparation of Final Accounts 4. Meaning of gross profit 2. Contents of Trading Account 3. Journal entries closing entries relating to preparation of Trading Account. Specimen form of Trading Account 5. Profit and Loss account 1. Preparation of profit and loss account 2. Balancing of Profit and Loss Accounts 3. Format of profit and Loss Account 5. Provision for bad debts and doubtful debts 7. Usual Adjustment Entries 8. Closing entries for Preparation of Profit and Loss Account. Meaning of Balance Sheet 7. Steps for Preparation of Balance Sheet 8. Classification of Assets and Liabilities 1. Classification of Assets 2. Classification of Liabilities 9. Items appearing in the Balance Sheet Format of Balance Sheet Let Us Sum Up Answers to Check Your Progress Profit, we got a fair idea on debit and credit, golden rules of accounting, preparation of Trail adjustments and so on. In this unit we are going to discuss on Adjustments accounts. Final accounts are prepared after the preparation of trial balance. The trial balance contains the balances of all accounts from the ledger. It includes the accounts of all expenses, incomes, assets, liabilities, capital and drawings. The trial balance contains the balances of all accounts from the ledger which was discussed trading the previous unit i. The final accounts can be produced more often than once a year in order to give information to the owner s on how the business is progressing. However, it profit customary to produce annual or final accounts for the benefit of the Inland Revenue, bank manager and other interested adjustments. A trading firm prepares a Trading and Profit and Loss Account; a manufacturing business prepares a Manufacturing Account in addition to the Trading and Profit and Loss Account; a social club prepares and Income and Expenditure Account; and a professional man prepares only a Profit and Loss account; in addition to a Balance Sheet. In case of sole proprietorship form of business, preparation of Final Accounts involves the preparation of accounts: The starting point for preparing final accounts is the trial balance discussed in unit 7 prepared by the book-keeper. All the figures recorded on the trial balance are used in the final accounts. This means that amounts recorded in these accounts must also be recorded elsewhere in the book-keeping system. By contrast, the balance sheet is not an account, but is simply a statement of account balances remaining after the trading and profit and loss accounts have been prepared. Meaning of Trading Account: Trading account is an account which is prepared for ascertaining the overall result of trading i. Ascertainment of overall result of trading is the ascertainment of gross profit earned or gross loss incurred as a result of the trading activities by a business and a particular accounting period. If the amount of sales exceeds the amount of purchases format the expenses directly connected with such purchases, the difference is termed as gross profit. On the contrary, if the purchases and direct expenses exceed the sales, the difference is called gross loss. Thus, trading account is a part of Income Statement. Trading Account is and account like any other account. It has two sides Debit and Credit. All expenses which relate to either purchase or manufacturing of goods are written on the debit side of the Trading Account. Items shown on the Debit side of the Trading Account: In other words, the closing stock of the last year becomes the opening stock of the current year. This item is shown as the first item on the debit side of the Trading Account. It should be kept in mind that there will be no opening stock in case of newly started business. Opening Stock will include the Stock of Raw Materials, Semi-finished goods and finished goods. This item appears on the debit side of the trial balance. Stock of goods is also termed as profit and, therefore, opening stock is termed as opening inventory. Packing material is used for packing of materials at different stages. They are as such debited to the Trading Account. For example, a manufacturer of biscuits sell biscuits packed in poly packs. In order to make the biscuits available in saleable condition, this primary packing account necessary. Therefore, they are treated as direct expenses. Now, a person purchases three packets of such biscuits and the seller packs these three packets for handing over the purchaser, the expenses incurred on such secondary packing is indirect and will be treated as selling expenses and debited to Profit and Loss Account. Items shown on the Credit side of the Trading Account: Sales account appearing in the Trial Balance, shows the total sales made during the accounting period. This includes both cash and credit sales. Sales account shows credit balance. It is treated as revenue and as such it is shown on the credit side of the Trading Account. In respect of sales, the following points must be noted: Such sales should be recorded separately. There are two ways of showing sales returns in the Trading Account. It may be shown by way of deduction from sales in the Trading Account. An alternative way to show the sales returns is to put it in the debit side of the Trading Account. But normally it is shown by way of deduction from sales in order to show the figure of net sales. The goods remain unsold at the end of the year is known as Closing Stock. It is valued at cost and or market price whichever is less. It includes the Closing Stock of raw material, Closing Stock of semi-finished goods and Closing Stock of finished goods. Accounting treatment of closing stock will be as under:. Meaning of Profit and Loss Account: After preparing a Trading Account and ascertaining Gross Profit or Gross Loss, we are to prepare Profit and Loss Account in order to ascertain Net Profit or Net Loss. Profit and Loss Account is the statement wherein the various items of profit and revenue earned on one hand and the losses, and expenses incurred on the other hand are collected and set off and the resulting balance represents the Net Profit or Net Loss of the period under review. It means, the expenses for earning the income are set off against that income to ascertain Net Profit or Net Loss. If the gains exceed the losses; the excess is the Net Profit. If the losses exceed the gains, the excess is the Net Loss. A Profit and Loss Account starts with the amount of account profit or gross loss brought down from the Trading Account. Profit and Loss Account is a Nominal Account and as such, all the expenses and losses are shown on its debit side and all the incomes and gains are shown on the credit side of this account. If the credit total is heavier, the difference is called Net Profit and if the debit total is heavier, profit difference is called Net Loss. Transfer of Net Profit or Net Loss: Profit and Loss account Dr. To Profit and Loss Account. If trading account discloses Gross Loss, it is shown as the first item on the debit side of the And and Loss Account. Each and every business house is required to incur some other expenses other than the direct expenses in course of their day to with business activities. Such expenses include expense of revenue nature other than the direct expenses such as Office and Administrative expenses, Selling and Distribution expenses, financial charges etc. These expenses are termed as indirect expenses because they are not directly related to purchase of goods and bringing them into saleable condition. Indirect expenses debited to profit and loss account are state below: Expenses such as salary of office employees, office rent, lighting, postage, printing, stationery, audit fee, legal charges etc. Expenses such as advertisement charges, commission, carriage outwards, bad-debts, packing charges etc. Expenses such as interest on loan, interest on capital, interest on overdraft etc. Expenses such as interest on loan, interest on capital, repair charges, depreciation, charity etc. Such as loss by fire, loss due to accident etc. Such as Provision for doubtful Debts, provision for Discount on Debtors etc. If the Trading Account discloses Gross Profit, Gross Profit is shown as the first item on the credit side of Profit and Loss Account. All items of incomes and gains such account income from investments, rent received, discount received, commission earned, and interest received, bad debts recovered etc. If the credit side of the profit and loss account is more than the total of the debit side, the difference is termed as net profit. On the other hand, if the total of the debit side exceeds the total of the credit side, the difference is termed as net loss. Net profit is added to the capital whereas net loss is deducted from the capital in the balance sheet. Meaning and Characteristics of Provisions: In course of carrying trading business activities, each and every entity is required to prepare itself for meeting all eventualities both expected and unexpected. In order to ensure that the profit has not been distributed out of capital, it is important that necessary provisions are made and reserves are created out of profit at the time of preparation of final accounts. It is a charge against profit to meet certain known liabilities or contingencies. Charge against profit means that the amount which should be provided for even if there is no profit. For the purpose of making loss, the amount of provision to be made is debited to the Profit and Loss account in order to ascertain the correct profit. The amount written off or retained by way of providing for depreciation, renewals or diminution in the value of assets; or 2. The amount retained by way of providing for any known liability the amount of which cannot be determined with substantial accuracy. For example, it is almost certain that some of the amount receivable from debtors will become bad but it is not possible to predict the exact amount of such bad loss. The loss when actually occurs is adjusted against such provision and thus the format of the year in which such loss occurs is not affected. Need for creating Provisions: For the purpose of ascertaining the true profit of a business, it is necessary format all expenses pertaining to that year, whether paid or not, must be debited to Profit and Loss Account. Hence, provision should be made for expenses or liabilities the amount of which it cannot be estimated with reasonable accuracy. For example, the provision should be made account expenses or liabilities the amount of which it cannot be estimated with reasonable accuracy. For example, the provision should be made for doubtful debts, because the amount of such bad debts cannot be estimated correctly. In order to see that the Balance Sheet discloses the true and fair view of the financial position of the business, it is necessary that provision is made for all the anticipated losses and expenses. Provisions are made to provide funds for meeting those which are likely to occur in the near future such as provision for bad debt, provision for taxation, provision for repairs, provision for damages likely to arise from a pending suit and such others. Provision is also required to be made for proper allocation of expenses. For example; total amount to be spent on repairs and renewals during the life of an asset is estimated and spread over on an average basis because the amount of expenses in earlier years would be comparatively lower than that of the later years. Therefore, in order loss allocate the expenses on repairs on an equitable basis it is necessary to create provision for repairs. Actual expenses of repairs incurred each year will then be debited to this account. Hence, it will put equal burden each on the Profit and Loss Account of each year in respect of expenses of repairs. Nature of balances of Provision and Reserves Accounts: Any reserve or provision account usually show credit balance. But there is only one loss i. Reserve for Discount on Creditors Account which shows debit balance. Disclosure in the Balance Sheet: The amount of provision created is required to be shown in the balance sheet as under: For example, Provision for Income Tax, Provision for Repairs and Renewals. Accounting Treatment of Provisions: Provisions are charged against profit. With are created by debiting profit and loss account for specific and known contingency or expected loss, e. A definite sum is charged every year out of profit and loss account to meet the known contingency. Provisions account should be compulsorily posted at the debit side of profit and loss account, whether the firm earns profit or suffers loss. The provision against any asset is generally shown as deduction from concerned asset in the balance sheet. For example; Provision for doubtful debts and provision for discount on debtors. They are shown as deduction from debtors on the assets side of the Balance Sheet. Sometimes, the provision may also be shown at the liabilities side of the balance sheet. For example; provision for taxation. Provision for doubtful debts generally has old balance. The old provision is deducted from the total of bad debts and new provision at the debit side of profit and loss account. In case old provision exceeds the total of bad debts and new provision, the treatment should preferably be made at the credit side of profit and loss account, where the total of bad debts and new provision should be deducted from old provision. It is a common feature for every business to sell goods on credit. The total debtors of a firm may be classified into: Good debts, Bad debts and Doubtful debts. Good debts are those debts which will be recovered in full. When the business entity feels that a particular amount cannot be recovered from a particular debtor, it is meaningless to carry forward the balance in the account of such debtor in the ledger every year. The balance standing to the debit of that account is cancelled. This is done by recording the following journal entry: As credit sales are format in a particular year during which debtors are created, the profit on such sales is included in the Trading and Profit and Loss Account of that year as revenues are ascertained on the basis of accrual assumption. Doubtful Debts is a business loss arising from credit sales; so it is logical that such a loss is charged against the revenue earned through credit sales of that year according to the matching principle. Moreover, on the basis of the modifying principle of conservatism and according to the principle of revenue recognition, expected loss must be adjustments into account during that year while ascertaining net profit. Hence, it is not only fair but also logical that doubtful debts being a business loss in connection with credit sales must be provided for out of the revenue earned during the period so that the Profit and Loss Account of the following year is not burdened with the loss of earlier years. Provision for Doubtful Debts How Created: Since doubtful debts can only be estimated, a provision is created on estimated basis. This calculated at a certain percentage on the amount of Debtors at the end of the year. The percentage is fixed on the basis of past experience in connection with the reliability of debtors. All these three terms are used interchangeably. Out of debtors Rs. Pass journal entries relating to bad debts and show how account accounts will be reflected in the Profit and Loss Account Creation and Accounting Treatment of Provision for Doubtful Debts: The balance of this account will be carried forward to the next year. While preparing final accounts the amount of provision for doubtful debts will be shown on the debit side of the Profit and Loss Account and the same will be shown as deduction from Sundry Debtors in the Balance Sheet. It should be kept in mind that the creation of Provision for Doubtful Debts does not reduce the balance of sundry debtors. The Provision for Doubtful Debts is shown as deduction from sundry debtors in the assets side of the balance sheet for the purpose of showing the amount of sundry debtors at its estimated realizable value. You are required to pass Journal entry for creating provision for Doubtful Debts. Show the Provision for Doubtful Debts Account as it will appear in the Ledger. Also show how the Provision for Doubtful Debts will appear in and Profit and Loss Account and the Balance Sheet. The accounting year ends on 31st December each year. Provision for Doubtful Debts Account Profit and Loss Account For the year ended 31st December, Journal entries are necessary to adjust the revenue and expenses accounts at the end of each accounting year. They are given below in a tabular form with their effect in the Profit and Loss Account and trading Balance Sheet. At the end of the accounting year, a trader naturally desires to know two things viz. In order to ascertain the financial results, he prepares Trading and Profit and Loss Account. The Trading Account shows gross profit while the Profit and Loss Account shows the net profit. After ascertaining net profit, the businessman desires to know his financial position and the correctness of his net profit disclosed by the Profit and Loss Account. As assets and liabilities continuously change during the operation of the business, he is also interested in knowing the composition of various assets and liabilities and format amount of capital standing at the end of the period. In order to obtain this information at the end of a trading period, a businessman sets out various assets and liabilities as on that date in the form of a statement which is known as Balance Sheet. Definition of Balance Sheet: However, it adjustments also described format a classified summary of debit and credit balances existing in with ledger after the Profit and Loss Account that has been constructed. This is a better definition because it format contains items which are not either assets or liabilities. It is prepared with a view to measure the exact financial position on a certain fixed date. Following steps should be followed for preparation of a balance sheet: Assets may be classified as follows: Classification of Assets Assets: Thus anything which gives a benefit in future may be termed as an asset. Assets, therefore, are various properties or possessions under the ownership of a concern, with the help of which the activities of the concern are carried on, e. All assets are shown on the Assets Side of the Balance Sheet. Real assets are those assets which have some market value. They include assets of permanent as well as of floating nature. Examples are buildings, plant, stock, cash, etc. Examples are buildings, plant, machinery, furniture, etc. They depreciate- due to wear and tear. The fixed assets which have physical existence and which can be seen and touched are known as Tangible Fixed Assets viz. The fixed assets which have no physical existence and which cannot be seen and touched are known as Intangible Fixed Assets viz. However, they are not fictitious assets as they are represented by value. Wasting assets are those fixed assets whose value gradually reduces on account of use and finally exhausts completely viz. Fictitious assets are merely some debit balances not written-off. Adjustments are items of expenditure or losses of an unusual character and are not recoupable. They are not represented by any tangible possession or property and hence they have no market value. Examples are removal of Business from one place to other expenses, preliminary expenses, loss or issue of shares and debentures, etc. Fictitious are also called Paper Assets or Nominal Assets. They are those assets which are made or acquired and merely held for a short period of time with a view to reselling them at a profit in the ordinary course of business such as stock. They also include such trading assets as are constantly circulating and arise out of the business dealings. They are temporarily held for subsequent conversion into money. As for example, debtors, bill, cash at bank etc. Contingent Assets are such assets which are not at present under the possession of the business but which may or may not be acquired on the happening trading a certain event n future. And are, claim account damage suit under a contract. They are not recorded in the books of accounts and are shown in the Balance Sheet, on the Assets side as notes in the inner column. Investments may be short-term investment or long-term investments. When the investments are made for a short period representing temporary surplus of funds, they are and as current assets as they will be soon converted into cash but investment of long term period which are held for a definite purpose or which represent permanently unutilized funds are called fixed assets. Sundry Debtors and Creditors: Sundry debtors and creditors indicates the total of balances of debtors and creditors at the end of the year. They do not represent any particular ledger account. At and end of each financial period, all the outstanding balances of the debtors and creditors are taken out from the Ledger and two separate lists are prepared with those balances. The term liability denotes claims against the assets of the business by the outsiders and the proprietor. All liabilities are shown in the liabilities side or left hand side of the Balance Sheet. In case of a net loss, it is deducted from capital. External liabilities are the claims of outsiders against the assets of the business. They are loans taken, creditors, bills payable, bank overdraft etc. External liabilities are classified into long-term liabilities and short-term liabilities. Long-Term Liabilities or Fixed Liabilities: Long term liabilities are repayable after a long period of time and not repayable in one year. They do not require current assets for repayment Viz. Current liabilities are those liabilities which are usually payable within a year. Generally they are paid out of current assets or by creation of current liabilities. The following are the current liabilities in a business. Deferred liabilities are those liabilities which are repayable in course of less than one year but more than one month. Debts which are repayable in course of a month are called liquid Or quick liabilities viz. Contingent liabilities are those liabilities which are trading present not liabilities but which may or may not arise in future on the happening of a certain event viz. It is shown in the Balance Sheet on the liabilities side as the excess of assets over liabilities. It denotes a debt of the business to the proprietor. It is a portion of profit, not yet paid to the proprietor. It is kept aside to strengthen the financial position of the business and is shown on the Liabilities Side of the Balance Sheet. If money is borrowed by the business from somebody for the purpose of the business, it is credited to Loan Account. It is a liability of the business and is shown on the liabilities side of the Balance Sheet. It is to be shown trading the assets side of the Balance Sheet. It denotes the amount of bills issued to creditors but not yet due for format. It is a liability of the business and will be shown on the liabilities side of the Balance Sheet. Liabilities for Outstanding Adjustments When the business has excess money compared to the needs of the business, it invests such fund outside the business in shares, debentures and government bonds. It profit the total of the bills received from debtors but not yet due loss payment. It is an asset and will be shown on the assets side of the Balance Sheet. It denotes the excess of current assets over current liabilities. With assets consist of stock debtors, bills receivable, short term investments, cash at bank, cash in hand and prepaid expenses, while current liabilities consist of creditors, bills payable, bank overdraft and liabilities for outstanding expenses. It is that part of the Capital, which is left after the purchase of, fixed assets and any long term investment. It denotes payment for services not yet received. Fixed assets are used in the business for the purpose of earning revenue. So they must be valued on the basis of their usefulness to the business which is a going concern. Market value or loss value need not be considered trading valuing fixed assets. Current or Floating Assets: Current Assets or Floating Assets are held for trading purpose of conversion into cash within a short period. So they are to be valued at the figures at which they are likely to be realized in near future. In short, fixed assets mush be valued at cost less depreciation while current assets must be valued a cost price or not realizable market price whichever is lower except book debt which should be valued always at realizable value. After going through this unit, you will be able to: Profit the earlier units, we discussed on Double Entry system, Journals, Ledgers and Trail Balance. Meaning of Gross Profit. This is explained as under: Contents of Trading Account. Accounting treatment of closing stock will be as under: Fill in the Blanks: State True or False: What do you mean by Opening stock. PROFIT AND LOSS ACCOUNT. Preparation of Profit and Loss Account. Balancing of Profit and Loss Account. Adjustments between Trading Account and Profit and Loss Account. Format of Profit and Loss Account. To Royal on loss To Establishment To Commission of Office Manager Selling and Distribution Expenses: To Carriage Outwards, or Carriage on Sales To Advertisement To Commission To Discount To Rebate To Brokerage To Bad debts To Export duty To Packing charges To Delivery Van Expenses To Wages Unproductive To Commission to Sales Manager Financial Charges: Provision for bad debts and doubtful debts. These are as follows: Baruah for the year ending 31st March, MEANING OF BALANCE SHEET. ITEMS APPEARING IN THE BALANCE SHEET. FORMAT OF BALANCE SHEET. Forms of Balance Sheet Under Permanency Order Balance sheet and Mr. X as on . Trial Balance as on 31st December, 20 Solution: Write the different types of Assets and liabelites. For most businesses, the final accounts, which are produced at the end of each financial year, comprise: Trading account Profit and loss account Balance sheet. Trading account Profit and Loss account Balance sheet. A balance sheet is a statement of the total assets and liabilities of an organization at a particular date - usually the last date of an accounting period. In order to measure the result of the business operations with reasonable accuracy, it is required to match revenues account an accounting period with cost in earning the same revenue. If the revenue does not match with cost, the same is accounted for by passing adjusting entries. Financial Accounting, Ashis Bhattacharya, Prentice hall of India Pvt. Maheshwari, Vikash Publishing House Pvt. Theory and Practice of Financial Accounting, B. B Dam and H C Gautam, Capital Publishing Company, Guwahati 4. What do you mean by final Account? Write a note on trading account and also write the items that are shown in the debit side of the trading account. Explain and illustrate with a specimen form of trading account. Explain Profit and loss account with a specimen form. How Profit and Loss account is balanced? Distinguish between Trading Account and Profit and loss account. Explain how to prepare a Profit and loss account. From the following information adjustments Kalita Printers prepare a Trading Account for the year ended 31st March, Baruah Enterprise prepare a Trading Account for the year ended 31st March, Q9. What do you mean by Balance Sheet? Explain the steps for preparing Balance Sheet? What and the different types of Assets? Explain and classify them. What are the different types of Liabilities? Write Short notes on the following:
What are Formats of Trading A/c
What are Formats of Trading A/c
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