Final Accounts

FINAL ACCOUNTS 📊

In the field of accounting, final accounts play a crucial role in summarizing a company’s financial transactions and providing a clear picture of its financial position. Final accounts are prepared at the end of an accounting period and include the income statement, balance sheet, and cash flow statement. 📈

What are Final Accounts? 🤔

Income Statement: Provides an overview of revenues, expenses, gains, and losses over a specific period. 💰
Balance Sheet: Presents a snapshot of a company’s financial position at a specific point in time. 📅
Cash Flow Statement: Provides information about a company’s cash inflows and outflows during a specific period. 💵

Example 📋

Item	Amount (K)
Sales	200,000
Purchases	80,000
Returns Outwards	2,000
Stock 01/01/2013	20,000
Carriage Inwards	4,000
Closing Stock	10,000

John’s Trading and Profit and Loss Account for the Year Ended 31/12/2013 📅

Details	Amount (K)
Sales	200,000
Less: Returns Outwards	(2,000)
Net Sales	198,000
Less: Opening Stock	20,000
Add: Purchases	80,000
Add: Carriage Inwards	4,000
Less: Closing Stock	(10,000)
Cost of Sales	(94,000)
Gross Profit	104,000
Add: Discount Received	23,000
Add: Commission Received	8,500
Total Other Income	31,500
Total Gross Profit	135,500
Less: Advertising	(9,000)
Less: Discount Allowed	(11,500)
Less: Stationery	(12,000)
Less: Wages and Salaries	(16,500)
Total Expenses	(49,000)
Net Profit	86,500

John's Balance Sheet as at 31/12/2013 🏦

Details	Amount (K)
Fixed Assets
Land and Buildings	150,000
Motor Car	34,000
Furniture	20,000
Total Fixed Assets	204,000
Current Assets
Stock	10,000
Debtors	26,000
Cash at Bank	13,000
Cash in Hand	7,000
Total Current Assets	56,000
Less: Current Liabilities
Creditors	18,000
Working Capital	38,000
Net Assets	242,000
Financed By:
Capital	79,500
Add: Net Profit	90,500
Less: Drawings	(18,000)
Total Capital	152,000
Add: Long-term Liabilities (Mortgage)	90,000
Capital Employed	242,000

Conclusion 📝

Final accounts are essential in providing a comprehensive overview of a company’s financial performance and position. They enable stakeholders to assess the profitability, liquidity, and solvency of a business. By understanding the components of final accounts and their significance, individuals can make informed decisions based on reliable financial information. 📊