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But shop fittings is an asset or expenditure so where should it be posted in final account

Answer 1

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Principles and Practice of Accounting > Final Accounts for Sole Proprietors - Non-manufacturing > Balance Sheet

Final Accounts for Sole Proprietors - Non-manufacturing

Balance Sheet

Preparing the final accounts is the last stage of the accounting cycle. They help in determining the financial position of the business at the end of the financial as well as the accounting year. These include Trading account, Profit and loss account, and Balance sheet.

Balance Sheet

The balance sheet is a statement which states the assets and liabilities of a firm as at a certain date. As even a single transaction can make a difference in assets or liabilities, so the balance sheet is true only at a particular period of time. This is the significance of “asset” in the balance sheet. It is based on the accounting equation that is:

Total assets = Total liabilities + Capital

As balance sheet is a statement and not an account so there is no debit or credit side. So, Assets are shown on the right-hand side and liabilities on the left-hand side of the balance sheet.

Classification of Assets and Liabilities

Assets

Assets can be classified as:

a. Long term assets:

Long-term assets are those assets which are not to be sold by the firm and to be used for a long period of time, such types of assets are also known as Fixed assets. For example, land and building, plant and machinery, vehicles, equipment, etc.

b. Current assets:

Currents assets are those assets which can be converted into cash easily from the market. Generally within a year. For example, cash in hand, cash at bank, trade receivables, inventory, etc.

c. Intangible assets:

Intangible assets are those which cannot be seen or touched. For example, goodwill, patents, copyrights, etc.

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