FINANCIAL STATEMENTS

Prepared By Group # 5
Sumit Agarwal Shreya Saurabh Srivastava Himanshu Yadav Harshita Sinha Deepti Sharma

Contents
Introduction Capital & Revenue Expenditure Trading A/C Profit & Loss A/C Balance Sheet Conclusions

Financial Statements
Statements prepared at the end of the accounting period to access the financial status. For Example, profit or loss and asssets and liabilities of an enterprise are known as financial statements.
Financial Statements Income statements (Trading and Profit and loss account)  Position Statement (Balance Sheet)

Capital Expenditure & Revenue Expenditure

Expenditure incurred in business are classified as:

 Capital Expenditure  Revenue Expenditure Capital Expenditure- Expenses incurred in acquiring
and increasing the value of fixed assets are termed as capital expenditure.

Specific Features Capital expenditure is made for acquiring fixed asset.  Capital expenditure increase the value of an asset.  These expenditures are shown at the assets side of the balance sheet.

 Revenue Expenditure- The expenses which are

incurred as routine business expenses are known as revenue expenditure.

Specific Features These expenses incurred as routine basis.  These expenses do not add to the value of an assets but maintain it. For example, repairs, maintenance etc  Revenue expenditures are shown at the debit side of the trading and profit & loss account.

Trading Account

Trading Account
An income statement prepared with cost of raw material, purchases and direct expenses with a view to ascertain gross profit or loss is known as trading account.

Format of Trading Account

Trading Account For the period ending ..
Particulars To Opening Stock To Purchases Less: Returns To Direct Expenses ( wages, carriage etc.) To Gross Profit (B.F)

Rs. Particulars
*** By Sales *** Less: Returns By Closing Stock *** By Gross Loss ***

Rs
** ** **

There are some terms in trading account which we calculate by following basisGross Profit =Net Sales-Cost of Good Sold Net Sales =Sale-Sales Return Cost of Good Sold =Sales-Gross Profit Cost of Sale =Opening Stock+Net Purchase+Direct Expenses-Closing Stock Net Purchase =Purchase-Purchase Return Gross Loss =Cost of Good Sold-Net Sales While calculating cost of good sold, we add direct expenses to opening stock and purchases. Direct expenses consists of expenses incurred in acquiring and manufacturing goods. These expenses are as follows on next slide.

Profit & Loss Account

Format of P & L Account

Profit & Loss Account For the period ending .. Particulars To Gross Loss b/d To Salaries To Rent To commission To Advertisement To Bad debts To discount To Net profit transferred to capital account Rs. *** *** *** *** *** *** *** *** Particulars By Gross Profit b/d By Discount Received By Net Loss transferred to Capital account Rs ** ** **

 Direct Expenses Expenses on acquiring goods Carriage and cartage (inward) Freight inward Octroi and local taxes Excise Duty Import duty Landing and clearing charges

 Expenses on manufacturing goods Coal, gas, water and fuel Wages Fuel and power Manufacturing expenses Factory expenses

Balance Sheet

Balance Sheet
Statement prepared to ascertain the status of assets and liabilities of the business enterprise on a particular date is termed as position statement or balance sheet. According to accounting equation : Assets=Liabilities+Capital

BALANCE SHEET As on--------------------Liabilities

Bank Overdraft Outstanding exp Bills payable Sundry creditors Long term loan Capital

Rs.
*** *** *** *** *** ***

Assets
Cash in hand Cash at Bank Prepaid exp Bills Receivables Sundry Debtors Closing Stock RM WIP FG P&M Furniture Building Land Goodwill

Rs ** ** ** ** ** ** ** ** ** ** ** **

 Features of Balance Sheet It is a statement Prepared on a specific date or time It is a statement of assets and liabilities Assets and liabilities tally each other

CONCLUSIONS

 Points To Be Considered While Preparing Final Accounts       Preparation of Trial Balance Showing items from Trial balance at one place Posting from Trial balance Posting of expenses Personal and Real accounts Factory and office expenses Treatment of rent, discount, interest and commission

THANK YOU