Advantage of final account?advantage of final accounting
Answers
Answer:
It helps to judge the profitability of the company by comparing the gross profit with sales. It helps to establish relationship between cost of goods sold and sales which ultimately helps to fix the selling price of the product. Trading account is the first step in the preparation of final account.
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Answer:
Final account is the last step involved in accounting cycle. It is maintained with a view to knowing the over result of a business operation. The final account depicts the results from operations of a business organization and also reflects the financial condition of the business organization during a certain period in other words; it is prepared to achieve overall objectives of accounting. The operation r
final account
esult is shown by profit and loss account thus indication profit or loss made during a period. Similarly, the financial position is depicted by balance sheet showing assets and liabilities of the business organization in a certain date.
Preparing of final accounts
Final account, being the final process of accounting, is prepared at the end of the accounting year; it normally involves preparation of profit and loss a/c and balance sheet. Nepal company act 2053 has specified the preparation of the following financial statement. They are company final account that includes incomes statement and balance sheet and cash flow statement. However, for sole trading business, t is common practice and convenient to split the final accounts into:
• Trading accounts
• Profit and loss account
• Balance sheet
The following chart reproduces the different steps in preparation of final accounts.
1. Trial balance
a. Income statement:- trading account/ profit and loss account
b. Balance sheet
Final account