Book keeping - Final Accounts - Tips

TIPS FOR PREPARATION OF FINAL ACCOUNTS IN 

BOOK KEEPING PAPER

ü  Each item in the Trial balance -------------------------->  Must only be entered once in Final Accounts.

ü  Adjustments at the foot of Trial balance ---------------------> posted two times in Final Accounts. 

ü  Post all Nominal accounts (such as all expenses and incomes ) in Trading and P&L Accounts.

ü  Post all Real (Assets) and Personal Accounts in the Balance Sheet.

ü  Balance Sheet is a Statement, not an Account.  Hence Dr and Cr words should not be used.

ü  Trading A/c or P&L A/c is prepared for the year 2014-15, whereas preparation of Balance Sheet as on 31st March, 2015.

ü  Because preparing Trading and P&L A/c to report their financial performance over a period of time i.e., for the year 2014-15, whereas Balance Sheet to report financial position at a specific date i.e., as on 31st March, 2015.

ü  Trading expenses should post in P&L A/c, not in Trading Account.  Here Trading expenses means expenses related to Sales.

ü  Carriage inwards --------------------> related to Purchases ----------------------> Trading A/c.

ü  Carriage outwards ------------------> related to Sales ---------------------> P&L A/c.

ü  Wages & Salaries ----------------------> Trading A/c.

ü  Salaries & Wages ------------------------>  P&L A/c.

ü  If Closing Stock appearing in Trial Balance  (instead of adjustments at the end of trial balance):

 Closing stock, under this case, will not be shown on the credit side of the Trading Account but will be shown on the assets side of  Balance Sheet only.  (Remember, any entry appearing in the Trial Balance appears only once. Closing stock is a real account, hence appears on the assets side of the balance sheet.)

MANY MORE SUCH TIPS WILL BE POSTED INTO THE WEBSITE IN COMING DAYS.  ALL THE BEST