Are you an accounting student? Or a student who had learned accounts but has forgotten everything at the moment and is struggling enough to deal with official account work. So here is a simple, worthy and complete package of Final Accounts which would forward a helping hand to you for preparation of final accounts homework answers.
We are sure you all must have easily perceived that why final accounts are named as final accounts. Because every entrepreneur â€“ Small or big, Solo or in Partnership, One Operations or in Joint Venture, need to have the results of Business on a yearly basis. Whether the firm has earned profits or has bored Losses.
Hence, these clear, accurate, final results of business are provided by final accounts. This is a final and annual statement which is evaluated by Owners, Financial Advisors, Stakeholders, and Chartered Accountants to get an awareness of the financial position of the company.
Section 209 of the Companies Act 1956, it is mandatory for the companies to keep and maintain certain books of Accounts.
Section 210 deals with Preparation of Final Accounts by all the registered companies.
Section 211 deals with the content and preparation of Profit and Loss Account and Balance sheet.
Whatâ€™s there in the Kit of Giant Final Accounts?
You know what; Final accounts can also be said as FATHER of all Accounting Books. Because it provides the accurate and relevant information which for the one who is financially associated with company.
So, for preparation of final accounts homework answers, students are usually supposed to enter the items from Trial Balance to Final Accounts. Closing balances of Ledger account are transferred to Trial Balance. Letâ€™s understand few sub-accounts in Final Accounts.
- Trading Account:
Buying and Selling of Goods, Purchase returns and Sales returns, demonstration between selling price and cost price and finally the gross profit earned or the gross loss sustained by the company, all these transactions are recorded in Trading Account.
- Profit and Loss Account:
Initially, the Gross Profit or Gross Loss is carry forwarded to this account, then revenues and expenses for that particular year are recorded. And at the end, we finally come to know about the Net Profit or Net loss of the business for that particular year.
- Balance Sheet:
Net Profit or Net Loss of the company is included in Balance Sheet along with the Assets and Liabilities. If Assets are excess over liability, the company is said to be financially sound and Vice-versa.
We would also like to share few Adjustments which are supposed to deal with Final Accounts for preparation of final accounts homework answers.
- Pre-Payments& Expenses (Amount paid or received in Advance.)
- Accruals (Owed Amount)
- Carriage Inwards- Carriage Outwards.
- Return Inwards- Returns Outwards.
- Bad Debts.
- Provision for Bad Debts and Doubtful Debts.
- Closing Stock.
- Or any other minor Adjustments as per the companyâ€™s operational, production, Financial Transactions.
The most common yet thrilling statement while studying Accounts- â€œMy Balance sheet is not tallied.â€
Folks, this experience is must with at least 1 problem in a chapter. It is one of those experiences which would you smile when you would recollect the college memories.Â But hey! Coming to the point, if these adjustments are posted correctly with logical understanding, nothing is going to stop you to tally your respective balance sheet in preparation of final accounts homework answers.
For the readers, who practically work in accountant department of the firms may sometimes find complicated to make final accounts. So here is a small pyramid which would show the clear flow of Entries.
Why Adjustment Entries?
Being an accountant student, there is a question which certainly arises in mind that why are these adjustments done afterward, why not directly these items are posted. The relevant answer is that there are few transactions which are posted after the trail balance is made and few transactions which show any advance received or paid, or any re-entry of any wrong or omitted transactions during the year and some transactions do not fit anywhere in Trial Balance.
Hence they are to be adjusted in Balance Sheet to the accurate financial data of the company. It also has to be noted that if the transaction (Advance or any other) is not related to the running financial year, may be for the next to next year; Entry would be skipped in such cases. We are sure now that this information would make you go a step ahead in preparation of final accounts homework answers.
Time for summarizing by going through the part of advantages.
Advantages of Final Accounting
- It provides the financial health of the company so that the stake holders get their interest in the company, provided it shows sound
- It helps in maintaining Bank Reconciliation statement.
- It helps in the process of Payrolling, Tax Management.
- It provides the reports of almost all financial aspects at a glance.
- It also helps in comparing and evaluating Cash flow.
Although, a little bit lengthy, this certainly is an interesting topic to study. An ice breaking question is, how much does it take to solve one assignment of Final Accounts? Well, it is dependent on the length of the assignment and its adjustments. On an average, the time for solving should not exceed 20 minutes. Try once! Pick your assignment and start solving now!
In case you are still wondering if you are the right person to start off studying this concept, then I can surely state that it is one of the best subjects to start off. All you have to do is to find the correct source.