FINALISATION OF ACCOUNTS IMPLIES PREPARATION OF PROFIT AND LOSS ACCOUNT AND BALANCE SHEET AT THE END OF A CERTAIN PERIOD NORMALLY AT THE END OF THE FINANCIAL YEAR IN CASE OF A RUNNING ENTERPRISE. FINALISATION IMPLIES THAT ALL TRANSECTIONS WHICH HAVE A BEARING ON THE FINANCIAL STATEMENTS SHOULD BE RECORDED IN THE BOOKS OF ACCOUNTS. FOR INSTANCE DEPRECIATION SHOULD BE PROVIDED. PREPAID EXPENSES SHOULD BE PROPERLY ADJUSTED. ALL PROVISION FOR INCOMES AND EXPENSES SHOULD BE MADE. THEN THE FINANCIAL STATEMENTS ARE DRAWN, IT IS POPULARLY CALLED FINALISATION OF ACCOUNTS.
DEEPAK THUKRAL
From India , Chandigarh
1DEEPAK THUKRAL
From India , Chandigarh
Dear friend,
I hope you would find this contribution useful.
Finalisation of accounts entails balancing of all entries in various ledgers from personal ledgers, norminal ledgers and real accounts ledgers.
Extractions of the balances from these accounts would be subject to accuracy test in the TRIAL BALANCE, however it should be noted that an important item of final account that is STOCKS does not oftentime well accounted for under the basic double entry principle but by valuation periodically.
Final accounts tends to achieve two objectives these are:
1. Report on performance over a clearly stated period via:
* Trading,Profit and loss accounts for a business concern.
* Income and expenditure accounts for non profit making organisation
- Trading accounts tends to match revenue to cost of sales to derive
the gross profit.
- Profit and Loss account measure the net profitability by charging
against the gross profit the expenses for the period including
depreciation.
- Income and expenditure accounts matches revenue against
expenditures to arrive at either surlus or excess of expenditure
over revenue over a given period for a non profit making concerns
2. Report on status of an organisation as at a point in time via:
* Balance sheet as at a particular date.
Balance sheet measure the assets which may be in form of FIXED
or CURRENT assets against the charges on the assets in form of
LIABILITIES which may be long term or current.
Owners interest is equally represented by capital and reserves.
3. For a financial statement to be meaningfull a clear statement of accounting policies under which the financial statements were prepared must be stated for it to be understood by stakeholders.
This presentation presumed that proper appreciation of the recordings from primary/ source documents of accounts to general ledgers can be well handle before talking of final accounts.
From Nigeria ,
I hope you would find this contribution useful.
Finalisation of accounts entails balancing of all entries in various ledgers from personal ledgers, norminal ledgers and real accounts ledgers.
Extractions of the balances from these accounts would be subject to accuracy test in the TRIAL BALANCE, however it should be noted that an important item of final account that is STOCKS does not oftentime well accounted for under the basic double entry principle but by valuation periodically.
Final accounts tends to achieve two objectives these are:
1. Report on performance over a clearly stated period via:
* Trading,Profit and loss accounts for a business concern.
* Income and expenditure accounts for non profit making organisation
- Trading accounts tends to match revenue to cost of sales to derive
the gross profit.
- Profit and Loss account measure the net profitability by charging
against the gross profit the expenses for the period including
depreciation.
- Income and expenditure accounts matches revenue against
expenditures to arrive at either surlus or excess of expenditure
over revenue over a given period for a non profit making concerns
2. Report on status of an organisation as at a point in time via:
* Balance sheet as at a particular date.
Balance sheet measure the assets which may be in form of FIXED
or CURRENT assets against the charges on the assets in form of
LIABILITIES which may be long term or current.
Owners interest is equally represented by capital and reserves.
3. For a financial statement to be meaningfull a clear statement of accounting policies under which the financial statements were prepared must be stated for it to be understood by stakeholders.
This presentation presumed that proper appreciation of the recordings from primary/ source documents of accounts to general ledgers can be well handle before talking of final accounts.
From Nigeria ,
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#Subject List: financial statement City-India-Madras trading accounts non profit profit and loss profit and loss account financial year cost of sales trial balance gross profit Country-India
Accounts.pdf
