Final Accounts - Principles of Accounting

Final Accounts - Principles Of Accounting
Page 1 of 9
Principles Of Accounting
Principles of Accounting Made Easy
Home Topics Pricacy Policy
Accounting
Contact Us
Balance Sheet Principles Tax & Accounting
Search
Business reporting
http://principlesofaccounting2.com/ http://principlesofaccounting2.com/ Final Accounts

THE FINAL ACCOUNTS OF A SOLE TRADER The trading account, profit and loss account and the balance sheet are called final accounts. Usually, the final accounts are prepared at the end of an accounting period. * Trial balance is the basis for preparing the final accounts.
New Travel Whitepaper Unlocks Secrets Big Data Holds For Travel www.Amadeus.com/BigData
TRADING AND PROFIT & LOSS ACCOUNT The purpose of preparing the trading account is to find out the gross profit or gross loss of the business during an accounting period.
The purpose of preparing the profit and loss account is to find out the net profit or net loss of the business for an accounting period Gross Profit Gross Loss Net Profit Net Loss Note: = = = Net sales Cost of goods sold Cost of goods sold Net sales Gross Profit + Incomes Expenses
/ http://www.principlesofaccounting2.com/
= Expenses Incomes Gross Profit Net sales Cost of goods sold = = Total sales Sales returns/ Return Inwards. Opening stock + Purchases + Carriage Inwards Return Outwards/ Purchase Returns Closing Stock Format of the Trading & Profit and Loss Account (Vertical Form) $ xxxxxx xxxx xxxxx xxxxxxx xxxx xxxxxx xxxx xxxxxxx xxxxx xxxxxx xxxxxxx (+) xxxxx xxxxx LESS: EXPENSES Rent paid Commission paid Discount allowed Interest paid Salary paid Power charges/ electricity charges Telephone charges Licence & taxes Depreciation on fixed assets Advertisement expenses Selling expenses xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx () () $ xxxxxx Sales Less: Return Inwards LESS: COST OF GOODS SOLD Opening Stock Add: Purchases Add: Carriage Inwards Less: Return Outwards Less: Closing Stock GROSS PROFIT/ GROSS LOSS Add: Incomes: Discount Received Interest Received Commission Received etc. xxxx xxxx xxxx
http://principlesofaccounting2.com/ http://principlesofaccounting2.com/
http://principlesofaccounting2.com/topics/final-accounts/
8/12/2013
Page 2 of 9
Carriage outwards/ carriage on sales Repairs to fixed assets etc. NET PROFIT/ NET LOSS
xxxx xxxx
xxxx xxxxxx
BALANCE SHEET This is the statement of assets and liabilities of a business prepared on a particular date to show the financial position of a business. The Balance sheet is prepared after the preparation of the trading, profit and loss account.
Format of the Balance sheet of a sole trader (Vertical form) Balance sheet of Mr. Ahmed, as at 31st December 2001 $ Fixed Assets: Plants & Machinery Land & Buildings Motor cars Furniture & Fixtures Motor vehicles Fixtures & Fittings Premises etc Current Assets: Stock (Closing) Debtors Cash in hand $ xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxx xxxx xx xx xxxxxx $
The balance sheet is prepared with the account balances left after the preparation of the trading and profit & loss account.
Usually, the trading account and the profit and loss account are prepared together. But the balance sheet is prepared separately.
Cash at bank Expenses prepaid Accrued incomes Less: Current Liabilities Creditors Bank Overdrafts Expenses owing Income received in advance Working capital Long Term Liabilities: Loan from the Bank Loan from other financial Institutions Xxxxxx Add: Net Profit/ Less : Net Loss Less : Drawings (Cash & Goods) xxxxx (-) xxx Xxxxxx Xxxxxx (+)/ (-) xxxx xxxx xxxx xxxx xxxxxx xxxx xxx Xx Xx (+) (-) xxxx xxxxx xxxxx (+)
Assignment Questions: Q. 1 The excess of net sales over the cost of goods sold in a particular period is called : (b) gross loss (c) trading a/c (d) none of these.
(a) gross profit
Q. 2
When the Gross profit is more than the total business expenses, the difference is called: (b) net Profit (c) cost of goods sold (d) none of these.
(a) net loss Q. 3 At the end of the year, the net profit should be credited in the
8/12/2013
Page 3 of 9
(a) drawings a/c (b) profit and loss a/c
(c) balance sheet
(d) capital a/c
Q. 4
Carriage on goods out of the firm is called: (b) carriage outwards (d) none of these.
(a) carriage inwards (c) carriage on purchase
Q. 5
Bank overdraft is an example of a (d) current asset
(a) current asset (b) current liability (c) long term liability
Q.6 (a) The cost of putting goods into a saleable condition should be charged to the trading a/c (b) (c) (d) profit & loss a/c balance sheet manufacturing a/c
Q.7 (a) (b) (c) (d)
The net profit is added to capital by: debiting in the capital a/c crediting in the Trial balance crediting in the capital a/c debiting in the cash a/c
Q. 8 (a) (b) (c)
Which of the following is correct? Profit increases the drawings Profit reduces the capital Profit does not affect any item
(d) Profit increases capital Q. 9 (a) (b) (c) (d) Name the account which should not be included in the Profit & Loss a/c: Sales office expenses Wages and Salaries Carriage on Purchase Carriage on sales Q. 10 (a) (b) (c) (d) Net profit is calculated in the: sales a/c profit & loss a/c trading a/c balance sheet
Q. 11 (a) (b) (c) (d) Q. 12 (a) (b) (c) (d)
The transportation cost for bringing the goods into the business is: travelling expenses carriage inwards carriage outwards motor expenses Rent paid for the subsequent period is a current liability long term liability current asset none of the above.
Q. 13 (a) Insurance is paid in advance by $ 150. What does it mean? The business has used $ 150
8/12/2013
Page 4 of 9
(b) (c) (a)
The business has unused $ 150 The business owes $ 150 None of the above.
Q. 14
A traders Turnover for the year were $ 3, 56,000, and his purchases were
$ 2,68,000. The stock at the beginning of the year was $ 31,400 and the stock at the end was $ 34,600. He had returned goods to his suppliers for $ 2,600
(a) $ 86,200 (b) (c) (d) $ 90,600 $ 91,200 $ 93,800 Q. 15 A business has fixed assets $ 10,000. Its current assets is $ 6,000,
What is his gross profit for the year?
working capital $ 2,000 and balance sheet total is $ 12,000 what is the amount of its current liability? (a) $ 1,000 (b) $ 2,000 (c) $ 3,000 (d) $ 4,000
Q. 16
Fill in the following with most suitable terms
1) 2) 3)
Working capital is the difference between - & Gross profit = - less -.
In the final accounts, the closing stock is shown in the - a/c
4) 5) 6) 7) 8) Bank overdraft is shown in the balance sheet as . Drawings are usually deducted from . Net profit is added to -. In the balance sheet, the working capital is added to the total of To find the amount of working capital, current liabilities total is deducted from - total 9) 10) 11) 12) 13) 14) The net profit is the difference between and Expense prepaid is an example of - asset. Expense payable is an example of Net sales cost of goods sold = Net sales = Sales less A loan taken from the bank, repayable after 5 years will be shown as - in the balance sheet
and in the -
15) 16) 17) 18) 19) 20) 21)
In the final accounts, the carriage inwards is taken to calculate the The total of income is added to Last years closing stock is the current years The principle of valuation of closing stock is Closing Capital = opening Capital + Net profit (or Net loss) The balance sheet is prepared to know the The purpose of preparing trading account is to calculate the- -
or 22) The profit & loss account is prepared to calculate the or
- -
24) The balance sheet is a statement of - & 25) 26) are the cost of operating the business. The balance sheet is not a part of
23)
Expenses Incomes Gross profit=
8/12/2013
Page 5 of 9
27)
The trading and profit & loss account and balance sheet are known as -
year ended 31st December 2002 Account Balances debit $ Capital Plants & Machinery Salaries Repairs Wages Cash in Hand Land & Buildings Purchases Sales Bank balance Discounts Commissions Debtors & Creditors Bad debts Stock 0n 1.1.2002 Advertising Office expenses 45,000 1,000 37,000 600 1,000 4,000 400 2,000 1,500 18,000 10,000 1,600 28,000 2,500 74,500 1,23,500 2,49,000 3,800 8,500 1,500 26,300 credit $ 50,000
Q. 17
The following trial balance was extracted from the books of a business for the
Fixtures & fittings Stationery Interest Rent & Rates Bank Loan Total 3,50,600 11,500 3,50,600 The closing stock on 31.12.2002 was valued at $ 28,000 Required to Prepare: 31.12.2002 (b) Balance sheet as at 31.12.2002 (a) Trading, Profit & loss account for the year ended
Q. 18
The following trial balance has been extracted from the books of Slim Traders
for the year ended 31st December 2001:
Account Balances
debit $
credit $ 1,98,000 700 200
Sales Discount received Bank interest Purchases Carriage outwards Carriage inwards Bad debts Rent Office salaries Sales commission Discount allowed Stationery Advertising Electricity 53,000 4,900 2,000 300 44,100 26,200 37,600 100 2,400 8,700 7,200
Cash at bank Stock on 1st January 2001 Debtors & creditors 4,700 39,000 10,000 8,000 11,300
8/12/2013
Page 6 of 9
Office furniture Delivery van Premises cost Loan from State Bank (repayable in 2012) Capital Drawings Interest on loan Total
37,300 29,000 22,000 98,300 14,000 2,000 3,30,500 3,30,500
The closing stock on 31.12.2001 was valued at $ 41,000
Prepare (a) (b) The trading, profit & loss account for the year ended 31st December 2001 The balance sheet of the business as at 31st December 2001 Q. 19 The following trial balance was extracted from the books of a sole trader for the year ended 31st December 2000: Account Balances debit $ Salaries and wages Insurance Administrative expenses Selling expenses Carriage on purchases Returns Cash in hand Carriage outwards Bank overdrafts Loan from ICICI Bank Drawings & Capital Land and Buildings Debtors & Creditors 4,200 1,200 2,670 3,180 2,700 400 1,255 725 7,900 7,550 12,000 31,280 700 credit $
29,500 21,000 25,000 93,250 20,000 8,250 9,600 Plants & Machinery Purchases and Sales 1,60,400 Equipments Stock of goods (on 1.1.2000) 1,000 Interest on Bank Loan 2,21,880 2,21,880 Total The closing stock on 31.12.2000 was valued at $ 14,700 Required: (a) (b) The trading, profit & loss account for the year ended 31.12.2000 The balance sheet as at 31.12.2000
Q. 20 The following trial balance was extracted from the books of a sole trader for the year ended 31st March 2002:Debit Balances Purchases Returns Inwards Opening stock Carriage inwards Wages Discount allowed Lighting & heating Travelling expenses Repairs Rent paid Furniture & Fittings Plants & Machinery Motor Vehicles Debtors Cash in hand Cash at bank Salaries Drawings AmountCredit Balances 37 000Sales 2 004Returns Outwards 8 851Discount received 456Interest received 16 251Creditors 237Bank Loan 1 198Capital 435 518 2 450 2 650 13 840 6 825 4 675 1 384 4 718 19 900 Amount 96 000 195 480 1 150 12 133 1 000 20 184
7 750 Total 1 31 142 Closing stock was valued at $ 9534 Total 1 31 142 Prepare (a) The trading, profit & loss account for the year ended 31st March 2002
8/12/2013
Page 7 of 9
(b) The balance sheet as at 31st March 2002 Q. 21 From the following trail balance prepare a set of final accounts for the year
ended 31st December 2002 Debit Purchases Carriage inwards Drawings Rent, Rates & Insurance Postage Stationery Machinery Buildings $Credit 92,300Sales 5,200Capital 5,000Creditors 4,500Commission received 3,000Discount received 2,700Returns outwards 55,000 45,000 15,000 $ 1,90,300 59,400 13,200 7,000 3,920 700
Fixture & Fittings Opening stock Bank balance Cash balance Debtors Discount allowed Bad debts Salaries & wages Advertising Carriage outwards Returns inwards Total 1,000 2,500 1,800 14,500 250 800 22,120 1,850 1,200 800 2,74,520 Total 2,74,520
The closing stock on 31st December 2002 was $ 12,400
Q 22. The following trial balance was extracted from the books L.Stokes, a sole trader, as at 31st March 2003:Account balances Drawings and capital Cash at bank Debtors and creditors Purchases & sales Returns Carriage outwards Debit $ 3 000 1 800 24 000 58 600 600 700 1 350 Credit $ 70 000 14 000 78 023 700
Carriage inwards Salaries & wages Commission paid Interest Bad debt Depreciation General expenses Plant & machinery Building and land Furniture & fixtures Cash in hand Opening stock Discount on purchases Discount on sales Telephone charges Salaries payable Total 12 370 630 1 240 700 4 500 188 12 000 30 000 4 000 500 6 000 1 400 825 2 120 1 65 123 1 000 1 65 123
The closing stock is valued at $ 17 000 From the above information, prepare a set of final accounts for the year ended 31st March 2003
Q 23. Prepare the trading & profit & loss account for the year ended 31st Dec 2003 and a balance sheet on that date from the following balances extracted from the books of a business $ 16 000Carriage outwards 4 000Returns inwards 3 000Returns outwards 1 500Salaries & wages 60 000Machinery 1 00 000Rent paid 950Power charges $ 250 150 450 4 400 20 000 1 000 300 3 500 750 100
Opening stock Closing stock Discount received Discount allowed Purchases Sales
Carriage inwards Drawings Capital Motor car 5 300Commission received 28 250Repairs to machinery 25 000General expenses
8/12/2013
Page 8 of 9
Advertisement expenses Debtors
450Salary received 5 000Creditors
1 950 4 000
Q 24. The following trial balance is extracted form the books of a sole trader for the year ended 31st Dec 2003:Debit balances Debtors Drawings Opening stock Motor car Land Equipment Petty cash balance $Credit balances 47 000Sales 7 300Return outwards 30 000Commission received 26 350Rent received 14 500Discount received 17 400Loan from bank 29 600Capital 3 000Interest received 2 160Creditors 9 900Loan from Ali 5 000Bank overdraft 2 550 8 690 10 754 1 83 000 1 000 4 900 21 700 42 700 6 746 4 400 900 4 79 550 Total 4 79 550 $ 2 30 000 3 500 3 100 1 200 5 700 29 000 1 50 000 4 900 17 190 30 000 4 960
Bad debts Communication expenses Insurance Return inwards Carriage outwards Building repairs Motor car diesel expenses Purchases Stationery expenses Electricity charges Machinery Cash balance Rent paid Wages paid License and taxes Total
The stock on 31st Dec 2003 was valued at $ 50 000 Prepare the trading & profit & loss account for the year ended 31st Dec 2003 and a balance sheet as on that date
Account balances Debit $ Credit $ Purchases & sales Returns in & out Carriage inwards Carriage outwards Debtors & Creditors Opening stock Salaries & wages Cash in hand Bank Depreciation Salaries owing Rent & rates Commission Discounts Plant Machinery Furniture& fixtures Advertising Insurance Heating & lighting Bad debts written off Bank loan(long term) Interest on bank loan Insurance prepaid Repairs to machinery Capital Total The stock at 31st Dec 2003 was valued at $ 2 040. 14 282 111 322 666 11 380 1 004 5 555 444 223 2 333 1 000 600 188 6 000 7 000 4 000 1 023 711 501 105 2 000 200 50 101 3 219 56 576 56 576 400 244 6 777 42 380 333
Q 25. The following trial balance was taken from the books of a business for the year ended 31st Dec 2003:-
Prepare a set final accounts for the year ended 31st Dec 2003 31st Dec 2003:-
Q 26. The following account balances are extracted from the books of a sole trader for the year ended
8/12/2013
Page 9 of 9
Plant & machinery Land & buildings Furniture Fixtures Cash in hand Returns inwards Purchases Salaries & wages Insurance Stationery Discount allowed Debtors Rates & taxes
$ 40 000Office expenses 50 000Electricity charges 10 000Returns outwards 5 000Capital 2 400Lighting & heating 800Carriage inwards 72 400Opening stock 21 000Discount received 5 000Commission received 1 050Postage expenses 1 000Bank overdraft 12 000Bad debts 1 250Creditors 1 20 000Selling expenses 700Closing stock 17 700
$ 1 800 750 2 700 81 000 1 100 2 100 6 100 1 200 2 000 250 4 500 400 6 500 500 7 200
Sales General expenses Bank loan You are required to prepare : a. The trial balance at 31st Dec 2003. b. The trading & profit & loss account for the year ended 31st Dec 2003. c. The statement showing the financial position of the business as at 31st Dec 2003. Incoming search terms: accounting for losses in a return inward difference between final account and cost accounting how will you show the following item(a)drawings(b)return inwards(c)returnoutwards in which final account will sales returns be shown principles of accounting final accounting PROFIT &LOSS A/C FOR THE YEAR ENDED 31-12-2000 where do you put carriage inwards in the trading account where do you put freight inwrds and outwards charges on cost of goods sold
http://www.principlesofaccounting2.com
8/12/2013

Final Accounts - Principles of Accounting

Uploaded by

Copyright:

Available Formats

Final Accounts - Principles of Accounting

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Final Accounts - Principles of Accounting

Uploaded by

Copyright:

Available Formats

Final Accounts - Principles Of Accounting

http://principlesofaccounting2.com/ http://principlesofaccounting2.com/ Final Accounts