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Note on Final Accounts

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Final Accounts
Final Accounts

The final account is the final process of accounting. Final account is prepared to show the final result of the company in a specific period. Final account is also known as financial statement.Profit and loss account and balance sheet are included in final account.Profit and loss account shows the profitability achieved during the accounting period and balance sheet reflects the composition of various assets, liabilities, and share holder's equityon the accounting period.Thus, final accounts are the combination of trading account, profit and loss account and balance sheet.

The following are the main definitions of final account: -

“Final account is the account, which is prepared at the end of the given year or period, to see the profit and loss position as well as the financial position of a going concern for the period given.” – S. Mukherjee

“Final accounts consist of trading account, profit and loss account and balance sheet. The trading account shows the gross profit or gross loss, net profit or net loss is calculated from profit and loss account and balance sheet is prepared to know the position of assets and liabilities.” – O. P. Gupta

Objectives of Final Accounts

Financial Statements of Final Accounts
Financial Statements of Final Accounts

The following are the main objectives of final accounts: -

  1. To determine gross profit and net profit of the business during the year.
  2. To present the true financial position of the business on a given date.
  3. To make effective control on financial activities of the business.
  4. To make a summary presentation of all the financial transactions.
  5. To communicate the operating results and financial position of the users.
  6. To help in making a different financial decision to the users of accounting information.

  • Final account is the final process of accounting. 
  • Final accounts consist of trading account, profit and loss account and balance sheet. 
  • Trading account shows gross profit or gross loss, net profit or net loss is calculated from profit and loss account and balance sheet is prepared to know the position of assets and liabilities.
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Very Short Questions

The following are the main objectives of final accounts: -

  1. To determine gross profit and net profit of the business during the year.
  2. To present true financial position of the business on a given date.
  3. To make effective control on financial activities of the business.
  4. To make a summary presentation of all the financial transactions.
  5. To communicate the operating results and financial position of the users.
  6. To help in making a different financial decision to the users of accounting information.

Final account is the final process of accounting. It is an accounting process, which is prepared at the end of the given period of time. It is prepared to know the amount of profit or loss and financial position of the business. The amount of profit or loss of the business during the year is determined by preparing trading and profit and loss accounts. The financial position of the business on a particular date is determined by preparing the balance sheet. Thus, final accounts are the combination of trading account, profit and loss account and balance sheet.

According to S. Mukherjee,“Final account is the account, which is prepared at the end of the given year period, to see the profit and loss position as well as the financial position of a going concern for the period given.”

From the above definition, it is clear that final account is an accounting process, which is prepared at the end of the given period of time. It is prepared to know the profit or loss and financial position of the business. Final accounts are the composition of trading account, profit and loss account and balance sheet of the business organization.

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  • The final account is ______ process of accounting.

    not the


    the second


    the first


    the final


  • "Final account is the account, which is prepared at the end of the given year period, to see the profit and loss position as well as the financial position of a going concern for the period given." Who gave this definition?

    S. Mukharjee


    Peter Drucker


    Shyam Sundar Sharma


    O. P. Gupta


  • "Final accounts consist of trading account, profit and loss account and balance sheet. Trading account shows gross profit or gross loss, net profit or net loss is calculated from profit and loss account and balance sheet is prepared to know the position of assets and liabilities." Who gave this definition?

    Gerson & Gerson


    J.R. Batliboi


    O. P. Gupta


    S. Mukharjee


  • Which one of them is not the objective of final accounts?

    To present erroneous financial position of the business on a given date.


    To determine gross profit and net profit of the business during the year.


    To make effective control on financial activities of the business.


    To communicate the operating results and financial position of the users.


  • The financial position of the business on a particular date is determined by preparing the ______.

    balance sheet
    trading account
    profit and loss account
    journal voucher
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shimson

what is final account


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