Final accounts are also known as financial statements.
These statements are prepared to know about operating results and overall financial position to the company.
Joint Stock Company needs to prepare its final account at the end of every financial year.
Generally, final accounts of a manufacturing company involve the following statements:
(1) Manufacturing account
(2) Trading account
(3) Profit and loss account
(4) Profit and loss appropriation account
(5) Balance sheet
According to Company Act, annual financial statement should be prepared by the board of directors of a public limited company every year at least thirty (30) days prior to the holding of its annual general meeting.
In the case of private limited company, within the six months of the expiry of its financial year.
According to company act, financial statement involves the following statements:
(a) Balance sheet as at the last date of the accounting or financial year.
(b) Profit and loss account of the accounting or financial year.
(c) Description of cash flow of the accounting or financial year.
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Accounting Equation |
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Basic Journal Entries in Nepali |
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Basic Journal Entries |
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Journal Entry and Ledger |
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Ledger |
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Subsidiary Book |
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Cash Book |
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Trial Balance & Adjusted Trial Balance |
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Bank Reconciliation Statement (BRS) |
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Depreciation |
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Final Accounts: Class 11 |
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Adjustment in Final Accounts |
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Capital and Revenue |
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Single Entry System |
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Non-Trading Concern |
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Government Accounting |
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Goswara Voucher (Journal Voucher) |
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Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country
PROBLEM: 5
Pooja Grill Industries has following trial balance on 31st December:
Debit balance |
Dr Amount |
Cr Amount |
|
Sundry creditors |
− |
1,00,000 |
|
Capital |
− |
5,50,000 |
|
Machinery |
2,70,000 |
− |
|
Goodwill |
52,000 |
− |
|
Debtors |
1,40,000 |
− |
|
Investment |
1,80,000 |
− |
|
Account payable |
− |
1,00,000 |
|
Return from customers |
5,000 |
− |
|
Sales |
− |
6,52,000 |
|
Return to suppliers |
− |
10,000 |
|
Purchase |
4,10,000 |
− |
|
Railway carriage on purchase |
40,000 |
− |
|
Opening stock |
60,000 |
− |
|
Advance commission |
− |
5,000 |
|
Wages |
20,000 |
− |
|
Rent |
51,000 |
− |
|
Power and fuel |
3,000 |
− |
|
Bad debts |
10,000 |
− |
|
Provision for bad debts |
− |
7,000 |
|
Apprentice premium (office) |
− |
6,000 |
|
Bank overdraft |
− |
51,000 |
|
Cash in hand |
30,000 |
− |
|
Cash at bank |
140,000 |
− |
|
Salary |
60,000 |
− |
|
Interest on investment |
− |
10,000 |
|
General expenses |
20,000 |
|
|
|
14,91,000 |
14,91,000 |
|
Required: (1) Trading account; (2) Profit and loss account; (3) Balance sheet
[Answer: Gross profit = $124,000; Net profit = $6,000; Balance sheet = $812,000]
SOLUTION:
Trading Account
Pooja Grill Industries
On 31st December 2021
Particulars |
|
Amount |
Particulars |
|
Amount |
To Opening stock |
|
60,000 |
By Sales |
652,000 |
|
To Purchase |
410,000 |
|
Less: Return |
(5,000) |
647,000 |
Less: Return |
(10,000) |
400,000 |
By Closing stock |
|
Nil |
To Railway carriage |
|
40,000 |
|
|
|
To Production expenses |
|
20,000 |
|
|
|
To Power and fuel |
|
3,000 |
|
|
|
To Gross profit c/d |
|
124,000 |
|
|
|
|
|
647,000 |
|
|
647,000 |
Cr 647,000 – Dr 523,000 = 124,000 GP
Profit and Loss Account
Pooja Grill Industries
On 31st December 2021
Particulars |
|
Amount |
Particulars |
Amount |
To Salary paid |
|
60,000 |
By Gross profit b/d |
124,000 |
To Rent paid |
|
51,000 |
By Apprentice premium |
6,000 |
To Bad debts |
10,000 |
|
By Interest on investment |
10,000 |
Less: PBD |
(7,000) |
3,000 |
|
|
To General expenses paid |
|
20,000 |
|
|
To Net profit |
|
6,000 |
|
|
|
|
140,000 |
|
140,000 |
Cr 140,000 – Dr 134,000 = 6,000 NP
Balance Sheet
Pooja Grill Industries
On 31st December 2021
Liabilities + capital +profit |
|
Amount |
Assets |
Amount |
Capital |
550,000 |
|
Cash in hand |
30,000 |
Add: Net Profit |
6,000 |
|
Cash at bank |
1,40,000 |
Less: Drawings |
Nil |
556,000 |
Machinery |
2,70,000 |
Sundry creditors |
|
100,000 |
Goodwill |
52,000 |
Account payable |
|
100,000 |
Debtors |
1,40,000 |
Advance commission |
|
5,000 |
Investment |
1,80,000 |
Bank overdraft |
|
51,000 |
|
|
|
|
812,000 |
|
812,000 |
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Problems and Answers of Final Accounts |
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country
PROBLEM: 5A
VK Traders has following extracted data on 31st December 2021:
Debit balance |
Amount |
Credit balance |
Amount |
Opening stock |
50,000 |
Sales |
486,250 |
Purchase |
215,000 |
Purchase return |
5,000 |
Sales return |
2,500 |
Dividend received |
3,500 |
Carriage on purchase |
4,250 |
Miscellaneous received |
750 |
Import duty |
12,000 |
Transfer fee |
500 |
Clearing charge |
11,500 |
Discount received |
1,250 |
Royalty for production |
8,000 |
|
|
Factory rent |
25,000 |
|
|
Salary |
80,000 |
|
|
Commission paid |
3,000 |
|
|
Coal, gas, water and fuel |
13,000 |
|
|
Tax paid |
22,000 |
|
|
Motive power |
7,000 |
|
|
Depreciation on machinery |
15,000 |
|
|
Depreciation on furniture |
5,000 |
|
|
Audit fee |
6,500 |
|
|
Sundry expenses |
9,500 |
|
|
Required: Trading, profit and loss account
[Answer: Gross profit = $143,000; Net profit = $8,000]
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country
PROBLEM: 5B
MK Manufacturing Company has following extracted data on 31st December 2021:
Debit balance |
Amount |
Credit balance |
Amount |
Opening stock |
80,000 |
Sales |
885,200 |
Purchase |
310,000 |
Purchase return |
5,000 |
Salary |
170,000 |
Dividend received |
3,500 |
Manufacturing expenses |
25,000 |
Provision for bad debts |
2,000 |
Import duty |
10,000 |
Sublet rent received |
8,000 |
Phone and internet expenses |
12,000 |
Discount received |
7,500 |
Sales return |
8,000 |
|
|
Sales commission |
7,000 |
|
|
Factory insurance expenses |
6,000 |
|
|
Interest on loan |
12,000 |
|
|
Wages |
60,000 |
|
|
Carriage inward |
18,000 |
|
|
Advertisement |
17,000 |
|
|
Audit fees |
8,000 |
|
|
Sample distribution |
5,000 |
|
|
Office rent paid |
72,000 |
|
|
Depreciation on equipment |
6,500 |
|
|
Carriage outward |
9,500 |
|
|
Selling expenses |
6,200 |
|
|
Bad debts |
4,000 |
|
|
Office insurance expenses |
5,000 |
|
|
Required: Trading, profit and loss account
[Answer: Gross profit = $373,200; Net profit = $60,000]
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country
PROBLEM: 5C
BG Company (P) Ltd has following accounts balances on 31st December 2021:
Name of ledgers |
Amount |
Name of ledgers |
Amount |
Land and building |
4,00,000 |
Capital |
616,000 |
Plant and machinery |
2,12,000 |
General reserve |
25,000 |
Motor bike |
80,000 |
Sinking fund |
12,000 |
Furniture and fixture |
50,000 |
Net profit |
55,000 |
Patent and trade mark |
20,000 |
Capital funds |
40,000 |
Fixed deposit into bank |
70,000 |
Secured loan |
250,000 |
Goodwill |
30,000 |
Unsecured loan |
35,000 |
Bills payable |
65,000 |
Closing stock |
69,000 |
Sundry creditors |
30,000 |
Cash in hand |
25,000 |
Outstanding expenses |
16,000 |
Bills receivable |
45,000 |
Advance income received |
2,000 |
Prepaid expenses |
8,000 |
Bank overdraft |
13,000 |
Advance tax paid |
3,000 |
Investment in shares |
50,000 |
Preliminary expenses |
12,000 |
Sundry debtors |
75,000 |
Spare parts (loose tools) |
5,000 |
Income receivable |
5,000 |
|
|
Required: Balance sheet
[Answer: Balance sheet = $11,59,000]
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country
PROBLEM: 5D
BR & Company has following extracted balances on 31st December 2021:
Name of ledgers |
Amount |
Name of ledgers |
Amount |
Goodwill |
58,000 |
Capital |
5,95,500 |
Plant and machinery |
3,00,000 |
Bank loan |
2,00,000 |
Vehicles |
4,50,000 |
General reserve |
10,000 |
Furniture and fixture |
80,000 |
Sinking fund |
5,000 |
Patent and trade mark |
50,000 |
Capital reserve |
35,000 |
Investment in debenture |
1,00,000 |
Unsecured loans |
2,50,000 |
Account payable |
13,000 |
Cash in hand |
25,000 |
Sundry creditors |
11,000 |
Account receivable |
6,000 |
Outstanding expenses |
50,000 |
Prepaid expenses |
8,000 |
Advance income received |
18,000 |
Advance given to KL Traders |
40,000 |
Assets replacement fund |
76,000 |
Advance tax paid |
3,000 |
Sundry debtors |
75,000 |
Preliminary expenses |
12,000 |
Accrued income |
5,000 |
Investment in government bond |
50,000 |
Cash at bank |
35,600 |
Closing stock |
60,000 |
Net profit for the year |
94,100 |
|
|
Required: Balance sheet
[Answer: Balance sheet = $13,57,600]
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country
PROBLEM: 5E
Kalpana Suppliers has following trial balance on 31st December 2021:
Debit balance |
Amount |
Credit balance |
Amount |
Salary |
30,800 |
Bills payable |
40,000 |
Furniture |
16,800 |
Creditors |
4,600 |
Wages paid |
23,400 |
Interest on investment |
3,000 |
Rent paid |
18,000 |
Commission received |
1,000 |
Direct expenses |
13,000 |
Purchase return |
5,000 |
Bills receivable |
20,000 |
Sales |
355,000 |
Debtors |
3,400 |
Capital |
110,000 |
Insurance expenses |
1,500 |
|
|
Machinery |
56,000 |
|
|
Purchase |
225,200 |
|
|
Sales return |
5,200 |
|
|
Cash in hand |
10,400 |
|
|
Freight inward |
5,800 |
|
|
Opening stock |
41,200 |
|
|
Stationery expenses |
2,200 |
|
|
Advertisement expenses |
3,000 |
|
|
Bad debts |
1,400 |
|
|
Investment |
40,000 |
|
|
Discount allowed |
1,300 |
|
|
|
518,600 |
|
518,600 |
Required: (1) Trading account; (2) Profit and loss account; (3) Balance sheet
[Answer: Gross profit = $46,200; Net loss = $8,000; Balance sheet = $146,600]
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