Complete Set Of Financial Accounts Accounting Essay

Concluding Histories are prepared to cognize net income or loss and besides the fiscal place of the concern. A complete set of Fiscal histories include

I ) A balance sheet,

two ) A net income And loss History

three ) Schedules And records.

Users of Final Account

The information in concluding histories is utile to no. of users.They include:

1 ) External Users:

a ) Owners

B ) Directors

degree Celsius ) Employees and workers

2 ) Internal users:

a ) prohibitions and fiscal institutes

B ) Investors and possible Investors creditors etc.

Capital And Revenue points:

All points looking in Trial balance which are of gross nature are taken to Profit and loss history while all points of capital nature are taken tobalance sheet.

Capital Outgo

Capital outgo is the sum spent by the endeavor on purchase of fixed assets that are used in the concern to gain income and are non intended for resale. For illustration: Outgo incurred for acquisition of fixed assets such as land etc.

Gross outgo:

gross outgo is the sum spent on running a concern. The benefit of gross outgo is exhausted inaccountind period in which it has incurred. For illustration: disbursals in twenty-four hours to twenty-four hours running os concern such as rent, wages, rewards etc.

Trading history

Trading history is the first phase in the procedure of fixing the concluding histories. Tradind history shows thegross net income or gross loss during the accounting period.Its chief constituents are gross revenues, services rendered on the recognition side and cost of such gross revenues or services rendered on the debit side.

Contentss of Trading history

Items shown on recognition side of the trading history:

a ) gap stock

B ) purchases and purchases return/ .

degree Celsius ) Direct Expenses

Items shown on recognition side of the trading history:

1 ) gross revenues and gross revenues return:

2 ) shutting stock

Balancing of trading history

After entering in several side of the trading history, the balance is calculated to determine gross net income or gross loss.

If the sum of the debit side is more than that of the recognition side, the surplus is Gross loss.

If the sum of recognition side is more than that of the debit side than surplus is known as Gross Net income

Gross net income can can be represented as follows:

Net gross revenues = Entire sales- gross revenues return

Cost of good sold = opening stock + net Purchases + Direct Expenses- shutting Stock

Net purchases = Entire purchases – Purchases return

Format of trading history

Net income and loss history

Net income and loss history is prepared to cipher the net net income or net loss of the concern for a given accounting period

“ A net income and loss history is an history into which all additions and losingss are collected in order to determine the surplus of additions over the losingss or frailty versa ”

It is the 2nd phase in the prepration of the concluding histories

It relates to a peculiar accounting period and is prepared at terminal of that period

Items in net income and loss history

Combined wages and rewards account

Depreciation

Discount

Loss by fire

Insurance

Bad debts and bad debts recovered

Balancing of net income and loss history

The balance in the net income and loss history represents net net income or net loss.

If the recognition side is more than the debit side, it shows net net income. If the debit side is more than the recognition side than, it shows net loss.

Net income AND LOSS ACCOUNT

Particulars

AMOUNT ( DR )

Particulars

AMOUNT ( CR )

Wages

GROSS Net income

Discount Allowed

Discount Received

Rent, Rates and Taxes

Provision For Doubtful Debts ( 500-525 )

Ad

Add- Samples

Depreciation ( 10 % on Plant & A ; Machinery )

Passenger car Outwards

Net Net income

Sum

Sum

Balance Sheet

A balance sheet is a statement prepared with a position to mensurate the fiscal place of a concern on a certain day of the month. The fiscal place of a concern is indicated by it ‘s assets on a given day of the month and it ‘s liabilities on that day of the month.

A balance sheet is prepared from the existent histories and personal histories

Contentss of the balance Sheet

Assetss

Labilities

Categorization of assets

1 ) Fixed assets: These assets are those assets that are acquired for continous usage and non for resale.

a ) Tangible fixed assets: those assets which can be seen and touched

B ) Intangible fixed assets: those assets which can non be seen or touched.

2 ) Current assets: these are those assets which are kept temporarily for resale or for change overing into hard currency. These are assets which are likely to be realized within a period of one twelvemonth or during the normal operating rhythm.

Categorization of Liabilitiess:

1 ) Long term liabilities or fixed Liabilitiess: These liabilities are non collectible by the concern in the following twelvemonth. They chiefly include long term loans.

2 ) Current liabilities: these are liabilities collectible by the concern within a twelvemonth. For illustration: Bills collectible.

3 ) Owners financess: The sum owing to the proprieters as capital is a category by itself.

Contingent Liabilitiess: A contingent liability is a liability that becomes collectible on the occurrence of an event. These liabilities are non shown in the balance sheet, they are disclosed by manner of a note. For illustration: Liabilitiess in regard of measures discounted, warrant for loan, disputed claims etc.

Practical solution:

Trading History

IN THE BOOKS OF AKHILESH FOR THE YEAR ENDINGaˆ¦

Particulars

AMOUNT ( DR )

Particulars

AMOUNT ( CR )

Opening Stock

30,000

Gross saless 1,27,000

( – ) Gross saless Return ( 1,000 )

1,26,000

Purchases 60,000

( – ) Purchase Returns ( 750 )

( – ) Drawings ( 5,000 )

( – ) Furniture ( 920 )

( – ) Advertisement ( 1,000 )

52,330

Closing Stock

34,220

Wagess

10,000

GROSS Net income

67,890

Sum

1,60,220

Sum

1,60,220

Net income AND LOSS ACCOUNT

IN THE BOOKS OF AKHILESH FOR THE YEAR ENDINGaˆ¦

Particulars

AMOUNT ( DR )

Particulars

AMOUNT ( CR )

Wages

7,550

GROSS Net income

67,890

Discount Allowed

425

Discount Received

800

Rent, Rates and Taxes

10,000

Provision For Doubtful Debts ( 500-525 )

25

Ad 2000

Add- Samples 1000

3,000

Depreciation ( 10 % on Plant & A ; Machinery )

7,800

Passenger car Outwards

1,200

Net Net income

38,740

Sum

68,715

Sum

68,715

BALANCE SHEET

IN THE BOOKS OF AKHILESH FOR THE YEAR ENDINGaˆ¦

Liabilities

AMOUNT ( DR )

Assets

AMOUNT ( CR )

Capital 1,00000

( – ) Drawings ( 5,000 )

95,000

Debtors 45,000

( – ) Provision For Doubtful Debts ( 500 )

44,500

Creditors

25,000

Plant & A ; Machinery 78,000

( – ) Depreciation ( 7,800 )

70,200

Net Net income

38,740

Furniture 2000

Add- Purchases 920

2,920

Cash

6,900

Closing Stock

34,220

Sum

1,58,740

Sum

1,58,740

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