Essay --

1. MEANING OF FINAL ACCOUNTS â€Å"Final accounts refers to the final statements of accounts prepared in order to ascertain and report the result of the financial activities of a business†[Accounting for management, N.P Srinivasan & M. Sakthivel, page no.85]. Trial balance establishes the accuracy of books of accounts. After preparing the trial balance, preparing final accounts is the next step. It includes Balance sheet, Profit and Loss account and Trading account. The Balance sheet would gives the financial position of the business, the Profit and loss account gives the net profit or loss earned and that of Trading account gives the gross profit earned or gross loss incurred. At the end of the accounting year organization prepare final accounts to find out the financial position of the organization. i.e. Profit or Loss. 2. TRADING ACCOUNT â€Å"Trading accounting is an account prepared to ascertain the trading result of a business i.e.; the gross profit earned or gross loss incurred from buying and selling of goods during a particular period. The excess of net sales [total sales less returns] over cost of goods sold is termed as gross profit. When the cost of goods sold is more than the net sales, the difference is termed as gross loss. The gross profit or loss is transferred to profit and loss account.†[Accounting for management, N.P Srinivasan & M. Sakthivel, page no.85]. Form of trading a/c:- TRADING ACCOUNT OF ____________ For the year ending†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦ Dr. Cr. Particulars Amount(Rs.) Particulars Amount(Rs.) To Opening Stock To purchases ... ...transfer Net loss Capital a/c Dr. 4. BALANCE SHEET A balance sheet is defined as a statement drawn upon a given date, generally at the end of each accounting year, to measure the exact financial position of a business, setting for the various assets and liabilities of the concern at this date†. On the left hand side of the balance sheet, the liabilities and capital are shown. On the right hand side, all the assets are shown .Therefore, the two sides of a balance sheet must always be equal. Otherwise, there is an error somewhere in the books of accounts. A properly drawn up balance sheet gives information relating to(a)the nature and value of asset;(b)the nature and extent of liabilities;(c)whether the firm is solvent ;and(d)whether the firm is over trading in short, it explains the financial condition of the concern.