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 AccountTrading Account

For the period ending ……..

Particulars Rs. Particulars Rs

To Opening Stock

To Purchases

Less: Returns

To Direct Expenses ( wages, carriage etc.)

To Gross Profit (B.F)

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By Sales

Less: Returns

By Closing Stock

By Gross Loss

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There are some terms in trading account which we calculate by following basis-

Gross Profit =Net Sales-Cost of Good SoldNet Sales =Sale-Sales ReturnCost of Good Sold =Sales-Gross ProfitCost of Sale =Opening Stock+Net Purchase+Direct

Expenses-Closing StockNet Purchase =Purchase-Purchase ReturnGross 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 AccountProfit & Loss Account

For the period ending ……..

Particulars Rs. Particulars Rs

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

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By Gross Profit b/d

By Discount Received

By Net Loss transferred to Capital account

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• 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 SHEETAs on---------------------

Liabilities Rs. Assets Rs

Bank Overdraft

Outstanding exp

Bills payable

Sundry creditors

Long term loan

Capital

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Cash in hand

Cash at Bank

Prepaid exp

Bills Receivables

Sundry Debtors

Closing Stock

RM

WIP

FG

P & M

Furniture

Building

Land

Goodwill

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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

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