Question

Features of final Account

Answer 1

distinguish between the profit and loss account and the balance sheet
explain the purpose, and effect, of depreciation in final accounts
outline the reasons for distinguishing between capital and revenue expenditure
The financial statements

UK law recognises a company as a separate legal ‘person’, an entity that is distinct from its owners. It can therefore sue and be sued, and take out contracts in its own name. Sole traders and partnerships, however, are not separate entities from their owners in the eyes of the law. In financial accounting, the (business) entity concept requires accountants to treat all businesses – including sole traders and partnerships – as separate entities from their owners.

The main financial statements are the profit and loss account and the balance sheet.

Profit and loss account

is an income statement
shows calculation of profit
information from expense and revenue accounts
Balance sheet

shows net assets and capital employed
summarises the financial position
information from asset and liability accounts

Answer 2

Answer:

The feature of Final Accounts: –

To know the Profitability of the business: – Final accounts help to business to get know the profitability of the business in a particular accounting year.

Financial Strength: – Final account provide information about the financial strength of the business.