Académique Documents
Professionnel Documents
Culture Documents
Final Account
Annual Higher Secondary Examination - 2018
ANJALI SAH
ROLL NO. : IC-16-028
REG. NO. : ND06C16028
GANGADHAR MEHER JUNIOR COLLEGE
Place: -
Date: - Signature: -
The term “Final Account” includes the trading account, the profit and loss
account, and the balance sheet.
1
CERTIFICATE
This is to certify that Miss Anjali Sah, a student of +2 Commerce , 2nd year in
Gangadhar Meher Jr. College, bearing roll number IC-016-028, has
satisfactorily completed her project in Accountancy based on the contents and has
given satisfactory amount of it in this note-book containing a record of the project
for the batch 2016-2018.
2
CONTENTS
INTRODUCTION: After recording the transaction in the original books of accounts, the ledger
accounts are prepared in the ledger then all the ledger accounts are balanced according to their nature. To
arithmetical accuracy, a trial balance is prepared. After the preparation of trial balance the traders wants to
3
know trading result of business. The trading result of business means whether the business has earned profit
or suffered losses during the accounting period. As we know that, the main objective of is to earn profit.
Every business man is also interested in assessing the final position of the business on particular date. The
trading and profit and loss account and balance sheet are prepared the end of the accounting period. These
financial statement are popularly known as final account.
OBJECTIVE:
To study the profit and loss of a business.
To study the solvency of a business.
To judging the growth of the business.
To judging the financial strength of a business.
Comprehensive problem
On 1st April, 2016, Mr. Suresh Sah started a poly bag business with a capital of ₹ 14, 00,000. He
opened a bank account by depositing ₹ 9, 60,000 in it. He purchased a godown at chipilma for setting up his
business, it costs, 4, 00,000. The payment was made through cash account. He managed to get a loan of ₹
12, 00,000 for this purpose. The loan was repayable with interest of ₹ 2, 40,000 in three yearly instalments.
At the end of the first year, he has to repay₹ 5, 20,000 [₹4, 00,000 (principal) + 1, 20,000 (interest)].
Suresh purchased cutting machine and equipment’s for ₹ 16, 00,000. He gave 4,000 for electricity
connection. In this tech-savvy world, to run a business successfully, he purchased computers worth ₹3,
90,000 and paid a deposit of ₹ 10,000 with JIO for internet connection. He got his office furnished by paying
₹ 1, 00,000. He made people aware about his business by connecting business with GO DADDY.COM
whish costs his ₹ 18,000. All payments were to be made by cheques. All the receipts were in cash to be
deposited in the bank on the same day. At the end of the year, the position of her business showed the
following:
Total Revenue Realised (including sale of books and CDs) 19, 92,000
Outstanding Electricity Charges 1, 24,000
Telephone Charges 34,000
Petty Expenses 48,000
Entertainment Expenses 40,000
Maintenance Expenses 40,000
Purchase of Stationery 2, 20,000
Wages for the staff for maintaining the business 1, 26,000
He appointed three mechanical trainers for the business. They were to be paid ₹3, 72,000 for their services.
But their salaries for the year were outstanding. He withdrew ₹24, 00,000 by cheque each month for house
hold and persona expenses. A t the end of the year, he paid instalment of bank loan with interest.
5. He approached the bank for further loan as he was interested in expanding the business. Calculate the
ratios that bank would like to calculate to assess his solvency.
Solution:
JOURNAL: - It is a book of prime entry where transactions are recorded in order of date from a
memorandum or waste book.
LEDGER: - ledger is a principle or primary or principal book of account. It records all accounts in
classified manner.
LEDGER
BANK ACCOUNT
6
DATE PARTICULARS J.F. AMOUNT DATE PARTICULARS J.F. AMOUNT
2016 2016
April 1 To Cash A/c 9,60,000 April1 By Machines and 16,00,000
April 1 To Bank Loan A/c 12,00,000 Equipment’s A/c
2017 By Electricity Board 4,000
March To Revenue and 19,92,000 A/c 1,00,000
31 Sales A/c By Furniture and
Fixtures A/c 18,000
By Advertisement A/c 3,90,000
By Computers A/c 10,000
2017 By Jio Deposit A/c 2,20,000
March By Purchases A/c 34,000
31 By Telephone
Expenses A/c 48,000
By Petty Expenses A/c 40,000
By Entertainment
Expenses A/c 40,000
By Maintenance
Expenses A/c 1,26,000
By Wages A/c 2,88,000
2017 By Drawings A/c 5,20,000
March By Bank Loan A/c
31 7,14,000
41,52,000 By Balance c/d 41,52,000
CASH ACCOUNT
7
TELEPHONE EXPENSES ACCOUNT
ADVERTISEMENT ACCOUNT
PURCHASES ACCOUNT
8
March To Electricity 1,24,000 March By Profit and Loss 1,24,000
31 Charges payable 31 A/c
A/c 1,24,000 1,24,000
SALARIES ACCOUNT
WAGES ACCOUNT
DRAWINGS ACCOUNT
CAPITAL ACCOUNT
10
2016 2016
April 1 To Drawings A/c 4,000 April 1 By Cash A/c 14,00,000
To Balance c/d 11,12,000
14,00,000 14,00,000
2017 By Balance b/d
April 1 By Balance b/d 11,12,000
GODOWN ACCOUNT
MACHINES ACCOUNT
DEPRECIATION ACCOUNT
11
DATE PARTICULARS J.F. AMOUNT DATE PARTICULARS J.F. AMOUNT
2017 2017
March 31 To Godown A/c 20,000 March 31 By Profit and Loss 4,30,000
March 31 To Machines & A/c
Equipment’s A/c 4,00,000
March 31 To Furniture &
Fixtures A/c 10,000
4,30,000 4,30,000
TRIAL BALANCE: - It is a statement prepared from the list of debit and credit balances of ledger account
to check arithmetical accuracy and to facilitate preparation of final account.
12
44,00,000 44,00,000
PROFIT AND LOSS: - According to Carter, A Profit and Loss Account is an account into which all gains
and losses are collected in order to ascertain the excess of gains over the losses or vice.
TRADING ACCOUNT: - It is a component of final account which shows profitability on purchase and
sale of goods.
TRADING AND PROFIT AND LOSS ACCOUNT (For the year ending on 31st mar, 2017)
19,92,000 19,92,000
BALANCE SHEET: - It is a statement which is prepare on a particular date of an accounting year. It shows
the sources of funds and uses of fund.
CONCLUSION
1. GROSS PROFIT RATIO = 𝐺𝐺𝐺𝐺𝐺 𝐺𝐺𝐺𝐺𝐺𝐺 × 100 = 16,46,000 × 100 = 82.63%
𝐺𝐺𝐺 𝐺𝐺𝐺𝐺𝐺 19,92,000
Bank will see the followings ratios before granting the loan:
𝐺𝐺𝐺𝐺𝐺𝐺𝐺 𝐺𝐺𝐺𝐺+𝐺𝐺𝐺𝐺
Current ratio = × 100 = × 𝐺𝐺𝐺 =
7,54,000
𝐺𝐺𝐺𝐺𝐺𝐺 𝐺𝐺𝐺𝐺𝐺𝐺𝐺𝐺𝐺𝐺𝐺 𝐺𝐺𝐺𝐺𝐺𝐺𝐺+𝐺𝐺𝐺𝐺𝐺𝐺𝐺𝐺𝐺𝐺𝐺 𝐺𝐺𝐺𝐺𝐺𝐺𝐺𝐺 4,96,000
𝐺𝐺𝐺𝐺𝐺𝐺𝐺 𝐺𝐺𝐺𝐺𝐺𝐺𝐺𝐺𝐺𝐺𝐺
= 1.52:1
Debt to Equity Ratio = 8,00,000 = 800 = 0.52:1
= 𝐺𝐺𝐺𝐺 15,32,000 1,532
𝐺𝐺𝐺𝐺𝐺𝐺
After calculating these ratios we can say that suresh can easily obtain the loan from the
bank as current ratio and debt to equity are both favourable.
Final accounting is an essential practice for every enterprise to know the actual
performanceof the organisation. All mature organisation should necessary prepare final
accounts of the organisation for the effectiveness of business organisation.
14
BIBLIOGRAPHY
J.S Arora (2017) Double Entry Book Keeping, Kalyani Publisher, Page No. 2.1-2.66.
H.S Grewal (2017) Double Entry Book Keeping, Sultan Chand, Page No. 4.1-4.81.
15