Accounting Cycle : Final Accounts Without Adjustments — Flashcards

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Final accounts are the statements prepared at the end of the accounting year to show the result of business operations and the financial position of the business. They consist of the Trading Account, …

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Financial statements provide a summary of the accounts of a business enterprise. The balance sheet shows assets, liabilities, and capital at a certain date, while the income statement shows the result…

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Final accounts are prepared to find the profit or loss of the business and to show its financial position. They help present a true and fair view of performance and position.

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The three parts are: 1) Trading Account, 2) Profit and Loss Account, and 3) Balance Sheet.

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The Trading Account is the first part of the income statement. It is a nominal account prepared to find gross profit or gross loss by considering opening stock, purchases, direct expenses, sales, and …

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It is called a Goods Account because it includes only transactions related to goods, such as opening stock, purchases, sales, returns, closing stock, and direct expenses connected with goods.

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The debit side usually includes opening stock, purchases less purchases returns, and direct expenses such as wages, carriage inward, manufacturing expenses, import duty, dock charges, factory rent, fa…

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The credit side usually includes sales less sales returns and closing stock. If credit side exceeds debit side, gross profit is earned.