Accountancy

Final Account
Annual Higher Secondary Examination - 2018

ANJALI SAH
ROLL NO. : IC-16-028
REG. NO. : ND06C16028
GANGADHAR MEHER JUNIOR COLLEGE

Place: -
Date: - Signature: -

Internal examiner External examiner

 ABSTRACT
Final accounts give an idea about the profitability and financial position of a
business to its management, owners and other interested parties. All business
transactions are first recorded in a journal. They are then transferred to a ledger and
balanced. These final tallies are prepared for a specific period. The preparation of a final
accounting cycle. It determines the financial position of the business. Under these it is
compulsory to make trading account, profit and loss account and balance sheet.

The term “Final Account” includes the trading account, the profit and loss
account, and the balance sheet.

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 CERTIFICATE
This is to certify that Miss Anjali Sah, a student of +2 Commerce , 2nd year in
Gangadhar Meher Jr. College, bearing roll number IC-016-028, has
satisfactorily completed her project in Accountancy based on the contents and has
given satisfactory amount of it in this note-book containing a record of the project
for the batch 2016-2018.

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 CONTENTS

SL. NO. TOPICS PAGE NO.

1) Introduction 4
2) Comprehensive problem 4
3) Journal 6-7
4) Ledger 7-13
5) Trial Balance 13
6) Trading and Profit & Loss Account 14
7) Balance Sheet 14
8) Conclusion 15
9) Bibliography 16

INTRODUCTION: After recording the transaction in the original books of accounts, the ledger
accounts are prepared in the ledger then all the ledger accounts are balanced according to their nature. To
arithmetical accuracy, a trial balance is prepared. After the preparation of trial balance the traders wants to

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know trading result of business. The trading result of business means whether the business has earned profit
or suffered losses during the accounting period. As we know that, the main objective of is to earn profit.
Every business man is also interested in assessing the final position of the business on particular date. The
trading and profit and loss account and balance sheet are prepared the end of the accounting period. These
financial statement are popularly known as final account.

OBJECTIVE:
 To study the profit and loss of a business.
 To study the solvency of a business.
 To judging the growth of the business.
 To judging the financial strength of a business.

Comprehensive problem
On 1st April, 2016, Mr. Suresh Sah started a poly bag business with a capital of ₹ 14, 00,000. He
opened a bank account by depositing ₹ 9, 60,000 in it. He purchased a godown at chipilma for setting up his
business, it costs, 4, 00,000. The payment was made through cash account. He managed to get a loan of ₹
12, 00,000 for this purpose. The loan was repayable with interest of ₹ 2, 40,000 in three yearly instalments.
At the end of the first year, he has to repay₹ 5, 20,000 [₹4, 00,000 (principal) + 1, 20,000 (interest)].
Suresh purchased cutting machine and equipment’s for ₹ 16, 00,000. He gave 4,000 for electricity
connection. In this tech-savvy world, to run a business successfully, he purchased computers worth ₹3,
90,000 and paid a deposit of ₹ 10,000 with JIO for internet connection. He got his office furnished by paying
₹ 1, 00,000. He made people aware about his business by connecting business with GO DADDY.COM
whish costs his ₹ 18,000. All payments were to be made by cheques. All the receipts were in cash to be
deposited in the bank on the same day. At the end of the year, the position of her business showed the
following:
Total Revenue Realised (including sale of books and CDs) 19, 92,000
Outstanding Electricity Charges 1, 24,000
Telephone Charges 34,000
Petty Expenses 48,000
Entertainment Expenses 40,000
Maintenance Expenses 40,000
Purchase of Stationery 2, 20,000
Wages for the staff for maintaining the business 1, 26,000

He appointed three mechanical trainers for the business. They were to be paid ₹3, 72,000 for their services.
But their salaries for the year were outstanding. He withdrew ₹24, 00,000 by cheque each month for house
hold and persona expenses. A t the end of the year, he paid instalment of bank loan with interest.

You are required to:

1. Journalise the above transactions. Post them into ledger and prepare trial balance.
2. Prepare final account of Suresh.
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3. Charge depreciation @25% on equipment’s and cutting machines, 10% office furnished and 5% on
godown.
4. Calculate profitability ratios.

5. He approached the bank for further loan as he was interested in expanding the business. Calculate the
ratios that bank would like to calculate to assess his solvency.

Solution:
JOURNAL: - It is a book of prime entry where transactions are recorded in order of date from a
memorandum or waste book.

JOURNAL (In the books of Samleswari Poly Bag)

DATE PARTICULARS J.F. AMOUNT AMOUNT

(DR.) (CR.)
2016
April 1 Cash A/c Dr. 14,00,000
To capital A/c 14,00,00
(Being capital invested)
April 1 Godown A/c Dr. 4,00,000
To cash A/c 4,00,000
(Being godown purchased for cash.)
April 1 Bank A/c Dr. 9,60,000
To cash A/c 9,60,000
(Being account opened in bank.)
April 1 Bank A/c Dr. 12,00,000
To bank loan A/c 12,00,000
(Being loan take from bank.)
April 1 Machine & equipment’s A/c Dr. 16,00,000
To bank A/c 16,00,000
(Being machines & equipment are purchased.)
April 1 Electricity board A/c Dr. 4,000
To bank A/c 4,000
(Being security deposits made with electricity
board.)
April 1 Furniture and Fixtures A/c Dr. 1,00,000
To bank A/c 1,00,000
(Being office furnished.)
April 1 Computers A/c Dr. 3,90,000
Jio A/c Dr. 10,000
To bank A/c 4,00,000
(Being cash paid for computers and jio
connection.)
April 1 Advertisement A/c Dr. 18,000
To bank A/c 18,0000
(Being amount paid for advertisement.)
2017 Bank A/c Dr. 19,92,000
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 March 31 To revenue and sales A/c 19,92,000
(Being total revenue received.)
March 31 Purchases A/c Dr. 2,20,000
To bank A/c 2,20,000
(Being stationery purchased.)
March 31 Telephone charges A/c Dr. 34,000
Petty Expenses A/c Dr. 48,000
Entertainment Expenses A/c Dr. 40,000
Maintenance Expenses A/c Dr. 40,000
Wages A/c Dr. 1,28,000
To bank A/c 2,88,000
(Being expenses paid.)
March 31 Drawings A/c Dr. 2,88,000
To bank A/c 2,88,000
(Being amount withdrawn by proprietor.)
March 31 Interest On bank loan A/c Dr. 1,20,000
To bank loan A/c 1,20,000
(Being interest on bank loan due.)
March 31 Bank loan A/c Dr. 5,20,000
To bank A/c 5,20,000
(Being instalment of bank loan paid including
interest.)
March 31 Depreciation A/c Dr. 4,30,000
To Godown A/c 20,000
To machines & equipment’s A/c 4,00,000
To Furniture and fittings A/c 10,000
(Being depreciation provided.)
March 31 Electricity charges A/c Dr. 1,24,000
To electricity charges payable A/c 1,24,000
(Being outstanding electricity charges.)
March 31 Salaries A/c Dr. 3,72,000
To outstanding salaries A/c 3,72,000
(Being salaries outstanding.)

LEDGER: - ledger is a principle or primary or principal book of account. It records all accounts in
classified manner.

LEDGER
BANK ACCOUNT

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 DATE PARTICULARS J.F. AMOUNT DATE PARTICULARS J.F. AMOUNT
2016 2016
April 1 To Cash A/c 9,60,000 April1 By Machines and 16,00,000
April 1 To Bank Loan A/c 12,00,000 Equipment’s A/c
2017 By Electricity Board 4,000
March To Revenue and 19,92,000 A/c 1,00,000
31 Sales A/c By Furniture and
Fixtures A/c 18,000
By Advertisement A/c 3,90,000
By Computers A/c 10,000
2017 By Jio Deposit A/c 2,20,000
March By Purchases A/c 34,000
31 By Telephone
Expenses A/c 48,000
By Petty Expenses A/c 40,000
By Entertainment
Expenses A/c 40,000
By Maintenance
Expenses A/c 1,26,000
By Wages A/c 2,88,000
2017 By Drawings A/c 5,20,000
March By Bank Loan A/c
31 7,14,000
41,52,000 By Balance c/d 41,52,000

2017 To Balance b/d 7,14,000

April 1

CASH ACCOUNT

DATE PARTICULARS J.F. AMOUNT DATE PARTICULARS J.F. AMOUNT

2016 2016
April 1 To Capital A/c 14,00,000 April 1 By Bank A/c 9,60,000
2017 By Godown A/c 4,00,000
March By Balance c/d 40,000
2017 14,00,000 31 14,00,000
April 1 To Balance b/d 40,000

JIO DEPOSITS ACCOUNT

DATE PARTICULARS J.F. AMOUNT DATE PARTICULARS J.F. AMOUNT

2016 2016
April 1 To Bank A/c 10,000 April 1 By Balance c/d 10,000
2017
March
2017 10,000 31 10,000
April 1 To Balance b/d 10,000

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 TELEPHONE EXPENSES ACCOUNT

DATE PARTICULARS J.F. AMOUNT DATE PARTICULARS J.F. AMOUNT

2017 2017
March To Bank A/c 34,000 March By Profit and Loss 34,000
31 31 A/c
34,000 34,000

PETTY EXPENSES ACCOUNT

DATE PARTICULARS J.F. AMOUNT DATE PARTICULARS J.F. AMOUNT

2017 2017
March To Bank A/c 48,000 March By Profit and Loss 48,000
31 31 A/c
48,000 48,000

ENTERTAINMENT EXPENSES ACCOUNT

DATE PARTICULARS J.F. AMOUNT DATE PARTICULARS J.F. AMOUNT

2017 2017
March To Bank A/c 40,000 March By Profit and Loss 40,000
31 31 A/c
40,000 40,000

ADVERTISEMENT ACCOUNT

DATE PARTICULARS J.F. AMOUNT DATE PARTICULARS J.F. AMOUNT

2017 2017
March To Bank A/c 18,000 March By Profit and Loss 18,000
31 31 A/c
18,000 18,000

PURCHASES ACCOUNT

DATE PARTICULARS J.F. AMOUNT DATE PARTICULARS J.F. AMOUNT

2017 2017
March To Bank A/c 2,20,000 March By Profit and Loss 2,20,000
31 31 A/c
2,20,000 2,20,000

ELECTRICITY CHARGES ACCOUNT

DATE PARTICULARS J.F. AMOUNT DATE PARTICULARS J.F. AMOUNT

2017 2017

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March To Electricity 1,24,000 March By Profit and Loss 1,24,000
31 Charges payable 31 A/c
A/c 1,24,000 1,24,000

SALARIES ACCOUNT

DATE PARTICULARS J.F. AMOUNT DATE PARTICULARS J.F. AMOUNT

2017 2017
March To Outstanding 3,72,000 March By Profit and Loss 3,72,000
31 Salaries A/c 31 A/c
3,72,000 3,72,000

MAINTAINANCE EXPENSES ACCOUNT

DATE PARTICULARS J.F. AMOUNT DATE PARTICULARS J.F. AMOUNT

2017 2017
March To Bank A/c 40,000 March By Profit and Loss 40,000
31 31 A/c
40,000 40,000

WAGES ACCOUNT

DATE PARTICULARS J.F. AMOUNT DATE PARTICULARS J.F. AMOUNT

2017 2017
March To Bank A/c 1,26,000 March By Profit and Loss 1,26,000
31 31 A/c
1,26,000 1,26,000

DRAWINGS ACCOUNT

DATE PARTICULARS J.F. AMOUNT DATE PARTICULARS J.F. AMOUNT

2017 2017
March To Bank A/c 2,88,000 March By Capital A/c 2,88,000
31 31
2,88,000 2,88,000

INTEREST ON BANK LOAN ACCOUNT

DATE PARTICULARS J.F. AMOUNT DATE PARTICULARS J.F. AMOUNT

2017 2017
March To Bank A/c 1,20,000 March By Profit & Loss A/c 1,20,000
31 31
1,20,000 1,20,000

REVENUE AND SALES ACCOUNT

DATE PARTICULARS J.F. AMOUNT DATE PARTICULARS J.F. AMOUNT

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2017 2017
March To Profit and Loss 19,92,000 March By Bank A/c 19,92,000
31 A/c 31
19,92,000 19,92,000

ELECTICITY CHARGES PAYABLE ACCOUNT

DATE PARTICULARS J.F. AMOUNT DATE PARTICULARS J.F. AMOUNT

2017 2017
March To Balance A/c 1,24,000 March By Electricity A/c 1,24,000
31 31
1,24,000 1,24,000
2017
April 1 By Balance b/d 1,24,000

OUTSTANDING SALARIES ACCOUNT

DATE PARTICULARS J.F. AMOUNT DATE PARTICULARS J.F. AMOUNT

2017 2017
March To Balance A/c 3,72,000 March By Electricity A/c 3,72,000
31 31
3,72,000 3,72,000
2017
April 1 By Balance b/d 3,72,000

ELECTRICITY BOARD ACCOUNT

DATE PARTICULARS J.F. AMOUNT DATE PARTICULARS J.F. AMOUNT

2016 2016
April 1 To Bank A/c 4,000 April 1 By Balance c/d 4,000
2017
March
2017 4,000 31 4,000
April 1 To Balance b/d 4,000

CAPITAL ACCOUNT

DATE PARTICULARS J.F. AMOUNT DATE PARTICULARS J.F. AMOUNT

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2016 2016
April 1 To Drawings A/c 4,000 April 1 By Cash A/c 14,00,000
To Balance c/d 11,12,000

14,00,000 14,00,000
2017 By Balance b/d
April 1 By Balance b/d 11,12,000

GODOWN ACCOUNT

DATE PARTICULARS J.F. AMOUNT DATE PARTICULARS J.F. AMOUNT

2016 2016
April 1 To Cash A/c 4,00,000 March By Depreciation A/c 20,000
31 By Balance c/d 3,80,000
March
2017 4,00,000 31 4,00,000
April 1 To Balance b/d 3,80,000

MACHINES ACCOUNT

DATE PARTICULARS J.F. AMOUNT DATE PARTICULARS J.F. AMOUNT

2016 2016
April 1 To Cash A/c 16,00,000 March By Depreciation A/c 4,00,000
31 By Balance c/d 12,00,000
March
2017 16,00,000 31 16,00,000
April 1 To Balance b/d 12,00,000

BANK LOAN ACCOUNT

DATE PARTICULARS J.F. AMOUNT DATE PARTICULARS J.F. AMOUNT

2017 2017
March 31 To Bank A/c 5,20,000 April 1 By Bank A/c 12,00,000
To Balance c/d 8,00,000 2017
March 31 By Interest on Loan 3,20,000
A/c
13,20,000 13,20,000
2017
April 1 By Balance b/d 8,00,000

DEPRECIATION ACCOUNT

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DATE PARTICULARS J.F. AMOUNT DATE PARTICULARS J.F. AMOUNT
2017 2017
March 31 To Godown A/c 20,000 March 31 By Profit and Loss 4,30,000
March 31 To Machines & A/c
Equipment’s A/c 4,00,000
March 31 To Furniture &
Fixtures A/c 10,000

4,30,000 4,30,000

FURNITURES AND FIXTURES ACCOUNT

DATE PARTICULARS J.F. AMOUNT DATE PARTICULARS J.F. AMOUNT

2016 2016
April 1 To Bank A/c 16,00,000 March By Depreciation A/c 10,000
31 By Balance c/d 90,000

2017 1,00,000 1,00,000

April 1 To Balance b/d 90,000

TRIAL BALANCE: - It is a statement prepared from the list of debit and credit balances of ledger account
to check arithmetical accuracy and to facilitate preparation of final account.

TRIAL BALANCE (As on 31st march, 2017)

PARTICULARS AMOUNT PARTICULARS AMOUNT
Machines and Equipment’s A/c 12,00,000 Capital A/c 11,12,000
(less depreciation ) Revenue and Sales A/c 19,92,000
Depreciation A/c 4,30,000 Bank Loan A/c 8,00,000
Interest on Bank Loan A/c 1,20,000 Electricity Charges payable A/c 1,24,000
Electricity Board A/c 4,000 Outstanding Salaries A/c 3,72,000
Jio A/c 10,000
Telephone expenses A/c 34,000
Petty expenses A/c 48,000
Entertainment expenses A/c 40,000
Furniture’s and Fixtures A/c 90,000
(less depreciation)
Advertisement A/c 18,000
Purchases A/c 2,20,000
Electricity charges A/c 1,24,000
Maintenance A/c 40,000
Wages A/c 1,26,000
Salaries A/c 3,72,000
Godown A/c 3,80,000
Cash A/c 40,000
Bank A/c 7,14,000
Computers A/c 3,90,000

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 44,00,000 44,00,000

PROFIT AND LOSS: - According to Carter, A Profit and Loss Account is an account into which all gains
and losses are collected in order to ascertain the excess of gains over the losses or vice.

TRADING ACCOUNT: - It is a component of final account which shows profitability on purchase and
sale of goods.

TRADING AND PROFIT AND LOSS ACCOUNT (For the year ending on 31st mar, 2017)

PARTICULARS AMOUNT PARTICULARS AMOUNT

To Purchases A/c 2,20,000 By Revenue and Sales A/c 19,92,000
To Wages A/c 1,26,000
To Gross Profit c/d 16,46,000

19,92,000 19,92,000

To Interest on Loan A/c 1,20,000 By Gross Profit b/d 16,46,000

To Expenses A/c 34,000
To Petty Expenses A/c 48,000
To Entertainment Expenses A/c 40,000
To Advertisement Expenses A/c 18,000
To Electricity Charges A/c 1,24,000
To Maintenance A/c 40,000
To Salaries A/c 3,72,000
To Depreciation A/c:
Computers 4,00,000
Godown 20,000
Furniture and fixtures 10,000 4,30,000
4,20,000
16,46,000 1,46,000

BALANCE SHEET: - It is a statement which is prepare on a particular date of an accounting year. It shows
the sources of funds and uses of fund.

BALANCE SHEET (AS ON 31ST MARCH 2016)

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 LIABILITIES AMOUNT ASSETS AMOUNT
Capital 14,00,000 Machines and Equipment 12,00,000
Less: Drawings (2,88,000) Computers 3,90,000
Add: Net Profit 4,20,000 15,32,000 Godown 4,80,000
Bank Loan 8,00,000 Less: Depreciation (20,000) 3,80,000
Electricity Charges Payable 1,24,000 Furniture and Fixtures 1,00,000
Outstanding Salaries 3,72,000 Less: Depreciation (10,000) 90,000
JIO(security deposits) 10,000
Electricity board 4,000
Cash in hand 40,000
Bank 7,14,000
28,28,000 28,28,000

CONCLUSION
 1. GROSS PROFIT RATIO = 𝐺𝐺𝐺𝐺𝐺 𝐺𝐺𝐺𝐺𝐺𝐺 × 100 = 16,46,000 × 100 = 82.63%
𝐺𝐺𝐺 𝐺𝐺𝐺𝐺𝐺 19,92,000

 2. NET PROFIT RATIO = 𝐺𝐺𝐺 𝐺𝐺𝐺𝐺𝐺𝐺 × 100 = 4,20,000 × 100 =21.08%

𝐺𝐺𝐺 𝐺𝐺𝐺𝐺𝐺 19,92,000

 Bank will see the followings ratios before granting the loan:
𝐺𝐺𝐺𝐺𝐺𝐺𝐺 𝐺𝐺𝐺𝐺+𝐺𝐺𝐺𝐺
 Current ratio = × 100 = × 𝐺𝐺𝐺 =
7,54,000
𝐺𝐺𝐺𝐺𝐺𝐺 𝐺𝐺𝐺𝐺𝐺𝐺𝐺𝐺𝐺𝐺𝐺 𝐺𝐺𝐺𝐺𝐺𝐺𝐺+𝐺𝐺𝐺𝐺𝐺𝐺𝐺𝐺𝐺𝐺𝐺 𝐺𝐺𝐺𝐺𝐺𝐺𝐺𝐺 4,96,000
𝐺𝐺𝐺𝐺𝐺𝐺𝐺 𝐺𝐺𝐺𝐺𝐺𝐺𝐺𝐺𝐺𝐺𝐺

= 1.52:1
 Debt to Equity Ratio = 8,00,000 = 800 = 0.52:1
= 𝐺𝐺𝐺𝐺 15,32,000 1,532
𝐺𝐺𝐺𝐺𝐺𝐺

 After calculating these ratios we can say that suresh can easily obtain the loan from the
bank as current ratio and debt to equity are both favourable.
 Final accounting is an essential practice for every enterprise to know the actual
performanceof the organisation. All mature organisation should necessary prepare final
accounts of the organisation for the effectiveness of business organisation.

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 BIBLIOGRAPHY
 J.S Arora (2017) Double Entry Book Keeping, Kalyani Publisher, Page No. 2.1-2.66.
 H.S Grewal (2017) Double Entry Book Keeping, Sultan Chand, Page No. 4.1-4.81.

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