Question

How to solve the final account

Answer 1

1. What are the components of final accounts?

The components of final accounts are :

1. Trading account

2. Profit and loss account

3. Profit and loss appropriation account

For manufacturing companies, a manufacturing account is prepared in addition to all the other accounts.

2. How many types of final accounts are there?

There are generally three types of final accounts and they are:

1. Trading account

2. Profit and loss account

3. Balance sheet

3. What are the different stages of the final account of the company?

Different stages of final account of a company are:

1. Prepare trial balance

2. Adjusting the trial balance

3. Preparing adjusted trial balance

4. Prepare financial statements

5. Closing the books

4. How do you calculate final accounts?

Final accounts can be calculated as follows:

Make a list of trial balance items and adjustments

Record debit items on expense side of P and L account or assets side in balance sheet

Record credit items on the income side of trading P and L account or liabilities side of balance sheet.

Balance the profit and loss account and determine profit or loss from the trial balance

Add any profit obtained to the capital on the liabilities side of the balance sheet.

Make a total of the balance sheet.