Finalization of accounting

Sole Proprietorship  comes under  Non corporate entities , and  for  Non corporate entities guidelines has been  issued by ICAI  for preparation & finalisation of  Financial Statements including  taxation  please refer  those latest  Guidelines , Take help form CA . 

Check out on ICAI. web site https://www.icai.org / guidence notes ( search in Google) . take help of CA  for preparation of Financial Statement . You can also visit nearby ICAI office ,you will get printed copy . 

In  addition  to above I will give you more information about  step to  finalisation of  Sole proprietorship . 

1) After preparation  of   Trail balance  , you find out which  Item goes to Trading Account , profit & Loss Account , & Balance sheet . 

2) Then put  certain mark in Trail balance , like  Item which are suppose to go in  Trading Account you Put "T" as mark in Trail balance , "p" for Items In Profit & loss Account , "B" for Balance sheet . 

3) As per above mark put items in Trading A/c , Profit & Loss A/c  and  Balance sheet  from Trail Balance . 

4) Then mark " A"  for year end Adjustment  entries  in Trail balance 

5)  Do all year end adjustment entries like given bellow 

      a)  closing Stock 

      b) Deprecation 

     c)  Outstanding  Expenses 

     d)  Advance received  

     e)  Prepaid Expenses 

     f) Income Accrued  but not received    

    g) Any provision you want make 

6) After posting all  items  from Trail balance , and  doing all  year end adjustments entries , balance the Trading Account  , after balancing  either Gross Profit or Loss  will  transfer to Profit & Loss Account 

7) Balance  the  Profit & Loss Account  transfer either profit or loss to Capital account of the Sole proprietor .   

8) Any Drawing , personal  Income tax paid will transfer to Capital  Account  

9) After doing all above procedure make total of  Asset  & Liability side of  balance sheet , It must  Tally . 

              But now a days Accounting software's like Tally is available , so you will get ready made Trail balance , Trading Account ,  profit & Loss  Account  , Balance sheet  Etc , Also if  you go though Guidelines of ICAI  , according  to  guidelines , you have to prepare Vertical  Profit & Loss Account   , and in some cases  Accounting Stranded  (AS) may applicable while finalising  Accounts , So you go  through Guidelines of  ICAI  and prepare accordingly .