Chapter - 2
Final Accounts of Sole Trading Concern
(Non-Manufacturing Concern)
Trading Account:
A trading account is a part of the financial statements prepared by businesses to calculate the
gross profit or gross loss for a specific accounting period. It summarizes the direct incomes and
direct expenses related to the production or purchase of goods and services.
Dr. Trading Account of ……………. for the year ended …………. Cr.
Particulars ₹ Particulars ₹
To Opening Stock xxx By Sales xxx
To Purchases xxx Less: Return Inwards xx xxx
Less: Return outwards xx xxx By Closing Stock xxx
To Direct expenses:
Freight & Carriage xxx
Wages xxx
Gas, Water & Fuel xxx
Customs duty & Dock dues xxx
Royalty on production xxx
Cartage xxx
Carriage inwards xxx
Factory Expenses xxx
To Gross Profit c/d (B/F) xxx By Gross Loss c/d (B/F) xxx
xxx xxx
Profit & Loss Account:
A financial statement that provides a summary of a business’s revenues, expenses and profits/
losses over a given period of time.
Dr. Profit & Loss Account of ……………. for the year ended …………. Cr.
Particulars ₹ Particulars ₹
To Gross Loss b/d xxx By Gross Profit b/d xxx
Office & Administrative
expenses: Other Income:
To Salaries xxx By Discount received xxx
To Office rent, rates & taxes xxx By Commission received xxx
To Printing & Stationery xxx
To Telephone charges xxx Non-trading Income:
To Postage xxx By Interest received xxx
To Insurance xxx By Rent received xxx
To Audit fees xxx By Dividend received xxx
To Legal charges xxx
To Electricity charges xxx Abnormal Gains:
Maintenance expenses: By Profit on sale machinery xxx
To Repairs & renewals xxx By Profit on sale of
To Depreciation xxx investment xxx
Selling & Distribution
expenses:
To Salaries to selling staff xxx
To Advertisement xxx
To Godown rent xxx
To Carriage outward xxx
To Bad debts xxx
To Provision for bad debts xxx
To Selling commission xxx
Financial expenses:
To Bank charges xxx
To Interest on loans xxx
To Discount allowed xxx
Abnormal losses:
To Loss on sale of machinery xxx
To Loss on sale of investment xxx
To Loss by fire xxx
To Net Profit (transferred to By Net Loss (transferred to
Capital A/c) (B/F) xxx Capital A/c) (B/F) xxx
xxx xxx
Balance Sheet
The balance sheet may be defined as ‘a statement which sets out the assets and liabilities of a
firm or an institution as at a certain date.’
Balance Sheet as on ………….
Liabilities ₹ Assets ₹
Capital A/c xxx Fixed Assets:
Add: Net Profit/ Tangibles:
Less: Net Loss xxx Land & Building xxx
Xxx Plant & Machinery xxx
Add: Interest on capital xxx Furniture & Fixtures xxx
Xxx Vehicles xxx
Less: Drawings xxx
Xxx Intangibles:
Less: Interest on drawings xxx xxx Goodwill xxx
Patents xxx
Long-term Loans: Copyrights xxx
Term loans xxx Brand names xxx
Other loans xxx Trade marks xxx
Current Liabilities: Investments xxx
Creditors xxx
Bills payables xxx Current Assets:
Bank overdraft xxx Cash in hand xxx
Outstanding expenses xxx Cash at Bank xxx
Incomes received in advance xxx Closing stock xxx
Debtors xxx
Bills Receivables xxx
Prepaid expenses xxx
Outstanding incomes xxx
xxx xxx
