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Final accounts
Fundamentals of
accounting principals

Makerere university
bachelors of commerce

Final accounts
After preparing the trial balance, final accounts are prepared to achieve the objectives of the
accountancy
...
For achieving the objectives, the financial statements are prepared at the end
of each accounting period
...
Balance sheet or position statement will portray the financial
position of a firm on a particular date
...
e
...

The three following financial statements are prepared for the preparation of final accounts:
i
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iii
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Profit and loss account: it shows the net profit/ loss of the business
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It is the end product of accounting
process which gives consolidated accounting information of the accounting period ,after the
accounting period is over
...

“The trading Account shows the result of buying and selling of goods
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Trading Account is prepared for the following reasons





To know the gross profit or gross loss arising due to trading activities of the business
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Gives the trader an idea of the increase in Gross profit /Gross Loss and to assess the
performance of the performance of the business and take corrective measures ,if needed
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i
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iii
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v
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vii
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Purchases : hand cares total purchase both cash and credit made during the year
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Net purchases will be shown In the trading
account
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 Wages
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Sales returns or return inwards : sales returns must be subtracted from the Total sales to get
Net sales
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Closing stock
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it apperas out
side the Trial balance
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Treatment of closing stock in the final Accounts
When closing stock is given outside the Trial balance
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 The credit side on the Trading Account
 Under current Assets in the Balance Sheet
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This means that the closing stock have already been deducted from the purchases and thus it will ONLY
appear in the Balance sheet under current ASSETS
viii
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it can be calculated as follows

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