Final Accounts

Final accounts are the channel of conveying the profitability and financial stance to management, entrepreneurs and interested outsiders of the business.

When a entrepreneur starts a business he desires to know the financial execution of his business. He can easily ascertain these by preparing the Final Accounts, which is prepared on the basis of the Trial Balance.

The preparation of Final Accounts is the last step in the accounting cycle and that is why they are called Final Accounts.

Final Accounts include the preparation of
1. Trading and Profit and Loss Account ; and
2. Balance sheet.

Final accounts have to be prepared periodically that to on yearly basis, Its done in order to make a continuous assessment of the business for a completed span. All the expenses and incomes for the full accounting period are to be taken into account for preparing Final Accounts.


Major adjustments used in Final Accounts:

Few important and widespread items, which need to be adjusted at the time of preparing the final accounts are discussed below.

1. Closing stock
2. Outstanding expenses
3. Prepaid Expenses
4. Accrued incomes
5. Incomes received in advance
6. Interest on capital
7. Interest on drawings
8. Interest on loan
9. Interest on investment
10. Depreciation
11. Bad Debts
12. Provision for bad and doubtful debts
13. Provision for discount on debtors
14. Provision for discount on creditors.