What is the purpose of preparation of final accounts
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Answer:-
Final accounts give an idea about the profitability and financial position of a business to its management, owners, and other interested parties. All business transactions are first recorded in a Journal. They are then transferred to a Ledger and balanced. These final tallies are prepared for a specific period. The preparation of a final accounting is the last stage of the accounting cycle.It determines the financial position of the business. under this it is compulsory to make trading account, profit and loss account and balance sheet.
The term "final accounts" includes the trading account, the profit and loss account, and the balance sheet. The Companies Act makes it compulsory for companies to maintain certain books of accounts.
Financial condition is indicated by the Balance Sheet. These are, ordinarily, developed at the conclusion of the year therefore identified as final accounts. They assist the final objective of retaining statements. Their objective is to examine the importance of several incomes and responsibilities during the year and which results in profit or loss for the organization.