Beruflich Dokumente
Kultur Dokumente
Reference Books:
Accountancy by D. K. Goel
Rajesh Goel
OR
Double Entry Book keeping by T. S. Grewal
FINANCIAL STATEMENTS
Financial Statements refer to such statements which report
the profitability and the financial position of the business
at the end of accounting period. It includes
I Trading and Profit & loss a/c which shows the results of
the business operations during an accounting period
II Balance Sheet which shows financial position of an
enterprise at a specified point of time.
TRADING ACCOUNT
Trading account is prepared to show the results of
buying and selling of goods. All expenses which
either relate to purchase of raw material or
manufacturing of goods are recoded in the trading
account. Such expenses are called direct expenses.
Opening Stock
Purchase & Purchase Return
Direct Expenses - All expenses incurred in purchasing the goods, bringing
them to the godown and manufacturing of goods are called direct expenses.
Direct Expenses Include the following:
(I)
Wages :-
If the item 'Wages and Salaries' is given in the question it will be shown on the trading a/c.
On the contrary, if 'Salaries and Wages is given it will be shown on the profit & loss
account.
If wages are paid for bringing or installing a new machinery it will be added to the cost of
machine and hence will not be shown in the trading account.
(II)
(III)
(IV)
debit
(V)
(VI)
(VIII)
Carriage or Carriage Inwards or Freight :Manufacturing Expenses :- All expenses incurred in the manufacture of goods are shown on
the debit side of the trading account such as Coal, Gas, Fuel, Water, Power. Factory Rent,
Factory Lighting etc.
Dock Charges:- If dock charges are paid on import of goods then they are shown on the
side of trading account. In the absence of specific instructions, these are debited to trading
account.
Import Duty or Custom Duty :Excise Duty
Royalty
Items written on the Cr. side of the Trading Account :(I) Sales & Sales Returns
(II) Closing Stock
Items written on the Dr. side of the Profit & Loss Account :Gross Loss
Office & Administrative Expenses:- Salary of office employees, office
rent, lighting, postage, printing, legal charges, audit fee etc.
Selling and Distribution Expenses :- Such as advertisement, charges,
commission, carriage outwards, bad-debts, packing charges, etc..
Miscellaneous Expenses :- Such as interest on loan, interest on capital,
repair charges, depreciation, etc..
Gross Profit
# Other Incomes and Gains. :- Such as income from investments, rent
received, discount received, commission earned, interest received etc.
NOTE:
@ Those expenses which are not related to business are not written in profit
& loss account
@ Only those items of expense and income are shown in Profit & Loss a/c
which are not shown in trading a/c
Gross Profit
Trade Expenses
Carriage on sales
Office salaries
Postage and Telegram
Office rent
Legal charges
Audit fee
Donation
Sundry Expenses
Selling expenses
Rs.
2,10,500
2,000
10,000
15,800
720
7,500
400
1,600
1,100
360
5,320
Discount Allowed
Lighting
Commission received
Bad debts
Discount (Cr.)
Interest on loan
Export duty
Misc. Receipts
Unproductive expenses
Traveling expenses
Rs.
3,000
780
840
1,200
600
2,200
2,300
500
4,100
2,500
BALANCE SHEET
A balance sheet is a statement of those assets and liabilities
of a business enterprise that can be given a value in terms
of money; it shows both the assets and how the assets are
financed; the figures are estimates, not scientific facts.
The liabilities indicate what money has been made
available to the enterprise, and from where.
The assets show how the enterprise has used the money
made available to it.
Total assets must always equal total liabilities to creditors
and shareholders. Every balance sheet must include the
name of enterprise and the date to which the figures in the
balance sheet refer.
The liabilities are listed on a balance sheet into three main groups : Share
holders fund (capital), fixed liabilities and current liabilities.
SHARE HOLDERS FUND: The shareholders are the owners of the company.
On the balance sheet the funds they provide are shown separately from
those of outsiders who have loaned money to the company.
CURRENT LIABILITIES AND FIXED LIABILITIES
outside liabilities.
SHAREHOLDERS FUND
When a company is formed, it needs money to carry on its
activities; a good deal of this money usually comes
from the shareholders, who buy shares in the company.
The money which the shareholders put into the company
in this way is described on the balance sheet as the
capital issued and paid up.
In return, at the discretion of the directors, the company
makes payments, to shareholders (pays dividends) out
of the profits made by the company.
In addition to the capital subscribed, shareholders funds
also include capital reserve and revenue reserve, which
represent profits retained in the business and not paid
to shareholders.
Amount Assets
Reserves
Fixed Assets:Furniture
Loose Tools
Motor Vehicle
Plant & Machinery
Land & Building
Goodwill
INVESTMENTS
Long Term Investment
Current Assets:Cash
Bank
Bills Receivable
Short Term Investment
Sundry Debtors
Closing Stock
Prepaid Expenses
Accrued Income
Misc. Exp. to the extent not
written off.
Amount
Sources of funds
1
Rs.
Shareholders Funds
a.
Share Capital
Authorised Capital
Issued capital
Xxx
b.
Xxx
XXX
Loan Funds
a.
Secured Loans
xxx
b.
Unsecured Loans
xxx
XXX
XXXX
Application of Funds
1
Fixed Assets
XXX
Investments
XXX
Miscellaneous Expenditures
xxx
xxx
xxx
xxx
xxxx
80000
60000
15000
2000
32000
10000
40000
8000
18000
24000
6000
150000
13000
260000
62000
260000
15310
82400
256000
4000
2400
18000
11500
6000
36600
7500
1200
5850
2000
4800
2600
5000
8700
250000
48000
S. Debtors
S. Creditors
Depreciation
Charity
Cash
Current A/c
Bank Charges
Establishment Exp
Plant
Leasehold Building
Sales Tax Collection
Goodwill
Patents
Trade Marks
Loan Cr.
Interest on loan
57000
12000
4200
500
4460
4000
180
3600
42000
150000
2000
20000
10000
5000
25000
3000
The value of closing stock on 31st December 1993 was Rs. 25400
VALUATION OF ASSETS