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
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.
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.
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
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