Final accounts are prepared at the end of the accounting year to know the result and financial position of the business.
Business is an economic activity, and its main purpose is profit. Therefore, a number of economic transactions take place during the year in the business entity. The financial transaction of each business is first recorded in journal or subsidiary books. On the basis of these books posting is done in ledger and balance of each account is found. On the basis of closing balance of each account, trial balance is prepared. If the total of credit balances and debit balances of trial balance are equal, then arithmetically accounts are correct.
After the preparation of trial balance, the next stage is final accounts. Final accounts are prepared at the end of the accounting year to know the result and financial position of the business.
In this course:
+ Financial Statements
+ Trading Account
+ Profit and Loss Account
+ Difference between Trading Account and Profit and Loss Account
+ Types of Profit
+ Balance Sheet
+ Comparison of Trial Balance and Balance sheet
+ Illustration for preparation of Final Accounts