Meaning of Final Account

Welcome to today’s class!!

We are thrilled to have you in our class!!

In today’s Store Management class, we will be learning about Meaning of Final Account

Meaning of Final Account

meaning of final account

Final accounts are those accounts that are prepared by a joint stock company at the end of a fiscal year. The purpose of creating final accounts is to provide a clear picture of the financial position of the organization to its management, owners, or any other users of such accounting information.

Final accounts are an integral part of a financial accounting year for every business. In other words, it is the end product of the accounting process carried out the whole year. 

Final account preparation involves preparing a set of accounts and statements at the end of an accounting year. The final account consists of the following accounts:

  1. Trading and Profit and Loss Account
  2. Balance Sheet
  3. Profit and Loss Appropriation account

Objectives of Final Account preparation

Final accounts are prepared with the following objectives:

  1. To determine profit or loss incurred by a company in a given financial period
  2. To determine the financial position of the company
  3. To act as a source of information to convey the users of accounting information (owners, creditors, investors and other stakeholders) about the solvency of the company.

Format of Trading Account

Trading Account of M/s ABC Limited

(For the period ending 31-03-2023)

Particulars Amount Particulars Amount
To Opening Stock XX By Sales XX
To Purchases XX By Closing Stock XX
To Direct Expenses XX By Gross Loss c/d XXX
To Gross Profit c/d XXX
Total XXXX Total XXXX


In summary, Final accounts are those accounts that are prepared by a joint stock company at the end of a fiscal year.



Explain the importance of a Final Account 


Reading Assignment

What are the steps involved in preparing a Final Account?


Weekend Assignment

A final account consists of how many other accounts? List them


We hope you enjoyed today’s class. In our next class, we will be talking about the Meaning of Balance Sheets.

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