Finalisation accounts

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balavinayagam (Querist)
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14 September 2011 hello sir

i am b.com graduate. i m working as an accounts data entry in private concern.
i post all entries but didnt know how to finalise the accounts. balavinayagam17@gmail.com

CA Ayush Agarwal

CA Ayush Agarwal (Expert)
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14 September 2011 Finalisation Accounts preparation

First of all we journalise the entries and post into the ledgers and again prepare the

trial balance after that trading and profit & loss a/c balance sheet. Again we will have

to analyse the all aspects for decision makin

The final accounts are:

Manufacturing Account

Trading Account

Profit And Loss Account

Profit and Loss Appropriation Account and

Balance Sheet.

The process of finalisation is something like this:

Prepare a Trial Balance

See whether it agrees or not

If it does not agree then investigate the ledgers

That process means that see whether Purchase ledger tallies with cash book purchase
entries etc.

After that you are ready to finalise the accounts but

provide for taxes

prepare provision for doubtful debts

prepare gross block of fixed assets and depreciation

prepare net block of fixed assets

prepare gross and net block of inventory and value inventory at cost or market value

whichever is less

for this purpose the market value of the inventory need to be ascertained

prepare bank reconciliation statement and tally all bank balances with bank accounts
prepare gross and net block of furniture and fixtures

provide for wages and salaries etc if they are payable after finalization period

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CA Ayush Agarwal

CA Ayush Agarwal (Expert)
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14 September 2011 In accounting paralance, finalisation of accounts means closing the books of entry for the financial year.
This is done as follows:

Prepare as TRIAL BALANCE based on the Ledger accounts.
With the help of T/B, prepare the Final Accounts, namely:
Trading & Profit and Loss Account
Balance Sheet.

Post all the direct expenses and income in TradinG Account.

TOTAL DIRECT INCOME - TOTAL DIRECT EXPENSES = GROSS PROFIT.

Carry forward the Gross Profit to P& L A/c

Post all indirect expenses and income in P&L A/c, along with the Gross Profit brought forward from Trading.

INDIRECT INCOME - INDIRECT EXPENSES = NET PROFIT.

Now post the Net profit to the Balance sheet- add to the capital account.

Tally the Balance sheet, a well tallied B/S shows accounts have been finanalised.

Some minor differences can be shown in Suspense account for rectification later.

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CA Ayush Agarwal

CA Ayush Agarwal (Expert)
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14 September 2011 Procedure for the finalisation of account is first to extract the Trial balance from The ledger ans go on from there to prepare the profit and loss account and balance sheet. If you are preparing the accounts for a limited company compliance with the companies act 1956 is must. you need to follow the Schedule 6 to the companies act 1956 and balance sheet should be in the format prescribed and Profit and loss account should be drawn as per the disclosure requirements.

CMA Gul S

CMA Gul S (Expert)
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14 September 2011 Balance your trading Accounts (in case of manufacturing) take the gross profit to profit and loss account, balance the P/L account take the net profit to capital account. take the balance capital to Balance Sheet. This all can be done easily with a Trial Balance in place

balavinayagam

balavinayagam (Querist)
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14 September 2011
thank u for u r valuable suggestion