EASWARI ENGINEERING COLLEGE

EASWARI ENGINEERING COLLEGE DEPARTMENT OF MANAGEMENT STUDIES

DEPARTMENT OF MANAGEMENT STUDIES

ACCOUNTING FOR MANAGEMENT

TOPIC: FINAL ACCOUNTS WITH

ACCOUNTING FOR MANAGEMENT
TOPIC: FINAL ACCOUNTS WITH ADJUSTMENTS
BATCH NO 1 ADJUSTMENTS

BATCH NO:1
 WHAT IS FINAL ACCOUNTS

  Final accounts is a somewhat archaic bookkeeping term that

refers to the final trial balance at the end of an accounting period
from which the financial statements are derived.
 The final accounts which are prepared at the last stage of
an accounting cycle. Final accounts show both the financial
position of a business along with the profitability, they are used by
external and internal parties for various purposes.
 NEED FOR FINAL ACCOUNTS

 To know the financial

position of the business
 To ascertain the results of
transactions
 For effective Forecasting and
Budgeting
 Growth Rate of business
 ACCOUNTING CYCLE
Preparation of Preparation
balance sheet Of
journal

Preparing trading Preparation of

account and profit Ledger
& loss account

Trial
balance
PREPARATION OF FINAL ACCOUNTS

Final Accounts include the preparation of :

1) Trading account
2) Profit & Loss account
3) Balance Sheet
these three statements are prepared to give the final results of the business,
all these are collectively called as final accounts
 TRADING ACCOUNT

 Trading Account is the first stage in the process of

preparing final accounts. 
 Trading account shows the gross profit or gross
loss during an accounting year.
 Its main components are sales, services rendered in
the credit side of such sales or services rendered in
the debit side.
 Proforma of Trading Account
Dr Trading Account of …….. For the year ending……... Cr
Particulars Amt. Particulars Amt.

To Opening Stock By Sales

To Purchases Less: Returns
Less: Returns By Closing Stock
To Direct By Gross Loss c/d*
Expenses:
Carriage Inward
Wages
Wages & salaries
Fuel & power
Coal, water & gas
Octroi
 PROFIT AND LOSS ACCOUNT

 An account in the books of an organization to which incomes

and gains are credited and expenses and losses debited over a
given period.
 An income statement showing a company's net profit or loss in
a given period.
 PROFORMA OF PROFIT AND LOSS ACCOUNT
PARTICULARS AMT PARTICULARS AMT

To Gross Loss b/d Profit b/d

To Establishment Charges By Other Incomes
To Administrative Charges By Interest rec.
To Selling & By Comm. Received Etc.
Distribution
By Net Loss (transferred
expenses
to capital account)
To Financial
Charges
To Depreciation & Provisions
To Abnormal Losses
To Net Profit
(transferred to Capital Account)

XXXX
XXXX
 BALANCE SHEET

A balance sheet is also called a 'statement of financial position'

because it provides a snapshot of your assets and liabilities at a
particular period of time.
 PROFORMA OF BALANCE SHEET
Liabilities amt Assets Amt

Capital Goodwill
Add: Net Profit Less: Land and Buildings
Drawings Fixed Plant & Machinery
Liabilities: Long term
loan Current Motor Vehicles
Liabilities: Unexpired Furniture
Income Short Term Patents
Loans Loose Tools Investments
sundry Creditors Bank Closing Stock
Overdraft
Bill Payable Debtors
Outstanding Expenses Bill Receivable
Cash at Bank
Cash in hand

XXXX XXXX
Adjustments

 Account adjustments are entries that are made in the general journal at the end of an
accounting period to bring account balances up-to-date. 
 Some of the adjustments are mentioned below
1. Closing Stock.
2. Outstanding Expenses.
3. Accrued Incomes.
4. Prepaid Expenses.
5. Advance Incomes.
6. Depreciation/ Amortization.
7. Bad Debts and Provision for Bad Debts
 Final accounts with adjustments example problem
Name of the Account Debit (Rs.) Credit(Rs.)
Capital   1,86,000 •April / May 2010) The following is the Trial Balance
Drawings 15,735  
Stock (01.07.09) 17,280   of Sivasakthi & Co. on 30th June 2009.
Sundry Creditors   18,900
The following adjustments are to be effected:
Sundry Debtors 43,500  
Machinery 60,000  
•Stock on 30th June 2009 Rs.20,400.
Patents 22,500   •5% on Sundry Debtors is to be written off as bad.
Freehold land 30,000  
Buildings 96,000   •Salaries for the month of June 2009 to Rs. 4,500 were
Sales
Sales Returns
 
2,040
2,96,340
 
unpaid.
Purchases 1,22,025   •Insurance include a premium of Rs. 510 on amounting a
Purchases Returns
Cash at Bank
 
7,890
1,500
 
policy expiring on Dec 31st 2009.
Cash in hand 1,620   •Rent Rs.3000 is accrued but not received.
Insurance 1,800  
General Expenses 9,000  
Salaries 45,000  
Wages 25,440  
Factory Fuel and Power 14,190  
Carriage on Purchases 6,120  
Carriage on sales 9,600  
Rent   27,000
  5,29,740 5,29,740
 Trading account for Sivasakthi Traders & Co
PARTICULARS AMT PARTICULARS AMT
(Rs) (Rs)
To Opening Stock 17,280 By Sales 2,96,340
To Purchase 1,22,025 (-) Returns 2,040
(-) Returns -1,500 2,94,300
1,20,525 By Closing Stock 20,400
To Wages 25,440
To Factory fuel 14,190
To Carriage on 6,120

Purchase 1,31,145
To GROSS PROFIT 3,14,700 3,14,700
 Profit and Loss account for Sivasakthi Traders & Co
PARTICULARS AMT PARTICULARS AMT
(Rs) (Rs)

To Bad debts 2,175 By Gross Profit 1,31,145

To Dep on 6,000 By Rent 27,000
Machinery 4,500 By Rent accrued 3,000
To Dep on Patents 9,000
To General expenses 45,000
To Salaries 4,500
(+) Outstanding 49,500
9,600
To Carriage on sales 1,800
To Insurance 570
(-) Prepaid 1,290
79,080
To NET PROFIT 1,61,145 1,61,145
 Balance sheet for Sivasakthi Traders & Co
LIABILITIES AMT ASSETS AMT
(Rs) (Rs)

Capital 1,86,000 Cash at bank 7,800

(+) Net Profit 79,080 Cash in hand 1,620
(-) Drawings 15,735 Stock 20,400
2,49,345 Machinery 6,00,000
Sundry creditors 18,900 (-)Dep 6,000
Outstanding salaries 4,500 Patents 22,500
(-)Dep 4,500
Buildings 18,000
Sundry debtors 43,500
(-)Bad debts 2,175
Freehold land 30,000
Rent accrued 3,000
Insurance prepaid 510
2,72,745 2,72,745
 BENEFITS OF FINAL ACCOUNTS
 Accounting helps to maintain the business records in a systematic manner.
 It helps in the preparation of financial statements.
 Accounting information is also used to compare the result of current year with the
previous year to analyze the changes.
 It helps the managers in the decision making process.
 It provides information to other interested parties such as shareholders, creditors,
investors, customers, government, employees, regulatory bodies etc.
 It helps in taxation matter
 Accounting information can be produced as evidence in the legal matter.
 It helps in valuation of business.
DISADVANTAGES OF FINAL ACCOUNTS
 Dependence on historical costs.
 Transactions are initially recorded at their cost.
 Inflationary effects.
 Intangible assets not recorded.
 Based on specific time period.
 Not always comparable across companies.
 Subject to fraud.
 No discussion of non-financial issues.
 THANK YOU

Final accounts with adjustments presentation done by

Gowri Shankar
Jaganathan
Hariharan.B
Arunprakash.N
Gokulakrishnan.E
Jayakrishna.A.R
Bharanitharan
Kishore.S