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Which are the final accounts? What is the result of the profit and loss account? |
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Answer» Trial Balance is prepared to ascertain the arithmetical accuracy of ledger accounts. After ascertaining accountancy of ledger, Final accounts are prepared. It is also called Financial Statements. Final accounts consists of two statements. They are 1. Trading and profit and loss a/c 2. Balance Sheet Trading and Profit and Loss account may be divided into two accounts, namely,
They may be prepared separately, but general practice is that they are prepared together. A trading account gives the result of buying and selling. It includes all the expenses incurred for buying and selling or manufacturing goods* The result is gross profit or gross loss. Profit and Loss account contains Gross Profit or Gross loss, brought down from trading account and also all the expenses and losses and all gains or profits which are of non-trading items. |
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