Question

report on final account aims & objective​

Answer 1

• Final Accounts – Definition

The accounts which are prepared at the final stage of the accounting cycle to know the profit or loss and financial position of a business concern are called Final Accounts.

• Explanation

Every businessman enters into business activities to earn profit. It is the accounting that shows profit or loss of a business concern. The role of accounting is to compile the financial record of a business in such a manner that yields the profit or loss of the business. We have already learned that all the transactions of a business are in the first instance recorded in the books of the original entry. Then these transactions are posted into ledgers in classified form.

These transactions are then summarized and arithmetical accuracy is checked by means of a “Trial Balance”. After the preparation of “Trial Balance”, the next step is the preparation of “Final Accounts”. The accounting cycle begins with the recording of transactions in the books of original entry and ends with the preparation of “Final Accounts”. As these accounts are prepared at the final stage of the accounting cycle that’s why these are called “Final Accounts”. These accounts consist of the followings:

• Trading Account
• Profit and Loss Account
• Balance Sheet