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FINAL ACCOUNTS

Ajit Sir

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Basic Rules

Everything in trial balance ONLY ONEEFFECT

Adjustments2 equal and opposite effects

What are Adjustments The transactions which are yet to be accounted

due to inevitability (Depn, Outstanding, etc) or

error

Closing stock, counted physically and recorded

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Trial Balance to Trading Account

Is it expense related directly to manufacturing

or purchase of Raw Materials?... Dr of Trading

Account. Anything related to inflow of goods

by way of purchase or mfg

Is it any way by which goodsare moving out?

Trading A/C Cr.

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Dr of P & L A/C

Expenses related to business but not directly

affecting inflow.

Expenses related to outflow

Admin, selling and distribution and financial

expenses

Depreciation

Other incomes on Cr of P & L

Trial Balance to Profit & Loss A/C

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Doesan Account have continuing impact in

the period to come?, then B/S

Would the continuing impact be, generationof inflow?... Then Asset

If the account would cause outflow in future

Liability

Trial Balance to Balance Sheet

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Dr.

Trading Account for the year ended 31st March, 2006

Cr.

Particu

lar Amt

Particul

ar Amt

Rs. Rs.

To Opening

Stock *** By Sales

To Purchases **** Cash ****

Less :Purchases Returns *** **** Credit ****

****

ToWages &

Salaries **** Less:Sales Return *** ****

To Carriage

Inward **** By Closing Stock ****To Gross Profit transferred to

Profit & Loss A/c ***

-

***** ****

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Dr. Profit &Loss Account for the year ended 31st March, 2006 Cr.

Particular Amt Particular Amt

Rs. Rs

To Sundry Expenses *** By Gross Profit From ****

To Rent, Rates & Taxes *** Transferred From Trading A/c

To Carriage Outward *** By Commission ***

ToTravelling Expenses ***

To Bad Debts ***

To Insurance Premium ***

To Postage ***

To Motor Car Expenses ***

To Net Profit **** -

****** ******

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Liabilities Balance Sheet as at 31st March, 2006 Assets

Particular Amt Particular Amt

Rs. Rs.

Capital **** Cash ***

Add: Net Profit **** Sundry Debtors

****

**** Bills Payable ****

Less: Drawings **** **** Closing Stock ****

Furniture ****

Sundry Creditors **** Motor Car ****

Bills Payable **** Buildings ****

***** *****

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Adjustments

Closing Stock

Dr to Asset side ofBalance Sheet

Cr to tra

dinga

ccount

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Depreciation

Less from Assets in Balance Sheet Cr Effect

P & L Dr. Side

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Expenses prepaid & Outstanding

Prepaid

Asset Side ofBalance sheet Dr Effect

Less

fromE

xp Fig in P & L

CrEffect

Outstanding

Liability in balance sheet Cr Effect

Add to Exp Fig in P & L Dr Effect

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Incomes Received in Advance and

Receivable

Yet Receivable

Asset Side ofBalance sheet Dr Effect

Add to Income Fig in P & L

CrE

ffect Received in Advance

Liability in balance sheet Cr Effect

Less from Income Fig in P & L Dr Effect

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Structure of Profit and Loss Account :-

Profit and lossaccount for the years ending..

Items Schedule No. Current years Previous years1. Income

Sales

Dividend

Interest

Other income

Total

2.Expenditure

(a) Cost of goodssold

Opening stock

Add : Purchases during the year .

Less : Closing stock

(b) Manufature expenses

( c) Selling expenses

(d) Salaries, wages & Employee benefits

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(e) Managerial remunaration

(f) Depreciation & amortization(g) Auditors remuneration

(h) Provision for doubtful debts/

contingent liabilities

(i) Interest expense

(j) Other expenses

3. Profit/loss before tax (1-2)

4. Provision for tax

5. Profit / lossafter tax

6. Proposed dividend

(a) Preference dividend

(b) equity dividend

7. Transfer to reserves

8.

Surplus

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Items Schedule No. Current years Previous years

1. Sources of Funds

(i) Shareholder's funds :

(a) Share capital

(b) Reseerve and surplus

(ii) Loan funds :

(a) Secured loans

(b) Unsecured loan

Total

2. Application of Funds

(i) Fixed assets

(a) Gross block

Less : accumulated depreciation

net block

(b) capital work in progress

(ii) Investment

(iii) Current assets,loansand advances :

(a) Inventories

(b) Sundry debtors

(c ) Cash and bank balance(d) Other current assets

(e) Loan and advances

less : Current liabilities & Provision

(a) liabilities

(b) Provision

Net current assets

(iv) Fictitousassets

(a) Miscellaneous expenditures

(to the extent not written off or adjusted)

(b) Profit and lossaccount

Total

Structure ofBalance Sheet :-

Name of the company

Balance sheet as on ..

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Schedule No.

Schedule 1

Share capital

Autorized capital

Issued and subscribed capital

Schedule 2

Reserve and surplus

Revaluation reserve

Capital redemption reserve

capital reserve

Debenture redumption reserve

Decurities premium

General reserve

As per last balance sheet

Add: Transferred during the current years

Profit and lossaccount (surplus)

Schedule 3

Secured loans

Schedule 4

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Schedule 5

Fixed assets- Tangible

(a) Opening balance (gross block)

Add : Additions

Less : Assets disposed

Fixed assets- Intangible 3

Closing balance (gross block)

(b) Opening balance (accumulated depreciation)

Add: depreciation for the years

Less : accumulated depreciation ofassets disposed

closing balance (accumulted depreciation)

Net block (a-b)

Fixed assets - intangible

Goodwill

Patents

Copyrights

Trademark and logo

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Schedule 6

Investment

(a) Long-term investment

(b) Current investment

(c ) Investment in subsidaries & Group

Companies

Schedule 7

Current assets, loansand advance :

(a) Inventories

(b) Sundry debtors

(c ) Cash and Bank balance

(d) Other current assets

Loan and advanced

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Schedule 8

Current liabilitiesand provision

(a) Current liabilities

Acceptances

Sundry Creditors

Other current lia

bilities

(b) Provision

Provision for tax

Proposed dividend

Other provision

Schedule 9

Miscellaneous expenditures

(to the extent not written off)

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Schedule 10

Contingent liabilities

Schedule 11

Sales & serviceSchedule 12

Other income 3

Schedule 13

Manufacturing and operating expensesSchedule 14

staff expenses

Schedule 15

Administation, selling and other

expenses

Schedule 16

Interest expenses

Schedule 17

Significant accounting policies

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Particluar Details Amount re.

Sales 20,00,000

Less : Cost of goods Sold (COGS)

Raw Material Consumed

Opening stock of R.M. 40,000

(+) Purchase of R.M. 2,00,000

(-) Closing stock of R.M. 5,000

Raw material consumed 2,35,000

Direct wages 1,10,000

Manufacturing expenses 90,000

4,35,000

Add : Opening stock of finished goods 50,000

Lee : Closing stock of finished goods 10,000

cost of Goods Sold 4,75,000 (4,75,000)

Gross profit 15,25,000

Less : Opening Expenses

Administrative expenses 10,000

Selling & Distribution expenses 1,40,000 (1,50,000)

Cash operating profit (EBDAIT) 13,75,000

Less : Depreciation & A,ortization

Depreciation 80,000

Preliminary expenses 5,000 85,000

Operating Profit 12,90,000

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Particluar Details Amount re.

Operating Profit 12,90,000

Add : Non-Operating Income 40,000

(profit onsa

le ofsha

re )Less: Non-operating expenses/Losses 5,000

(loss on sale of plant) 35,000

Earning before interest and Tax (EBIT) 13,25,000

Less : interest 40,000

Earning before Tax (EBT) 12,85,000Less : Tax 3,50,000

Earning after tax (EAT) 9,35,000

Surplus of provision years 1,15,000

Ass: Profit for the year 9,35,000

Less : (1) Transfer to General Reserve (4,80,000)(2) Preference Divided (1,00,000)

(3) Final Equity Dividend (1,40,000)

Surplus Carried Forward 3,30,000

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Laibilities Amount Assets Amount

(re. in

crore)

(re. in

crore)

Equity Share Capital (Face Valuere.10) 10,00,000 Plant (net) 22,00,000

12.5% Preference Share Capital 8,00,000 Building (Net) 5,80,000

General reserve 6,80,000 Land 4,60,000

Securities Premium 30,000 Investment 2,70,000

P & L a/c 3,30,000 Stock

10% Debenture 4,00,000 Finished goods 10,000

Sundry creditors 2,50,000 Raw material 5,000

Outstanding expenses 30,000 Sundry debtors 1,85,000

Tax Payable 3,50,000 Bank balance 50,000

Dividend payable 1,40,000 Marketable securities 20,000

Pre-paid expenses 1,30,000

Preliminary expenses 1,00,000

40,10,000 40,10,000

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Items Amount Re.

1. Source of Funds

(i) Shareholder's funds :

Share capital 18,00,000

Reserve & Surplus 10,40,000

(ii) Loan funds :

Secured loans 4,00,000

Total 32,40,000

2. Application of Funds

(i) Fixed assets :

Net Block 32,40,000

(ii) Investment 2,70,000

(iii) Current assets, loan and advances 4,00,000

Current liabilities & provision (7,70,000)

Net current assetas (3,70,000)

(iv) Fictitiousassets 1,00,000

Total 32,40,000

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By,

CA Ajit sirAssistant Professor,PTVAs Institute of Management