17. Final Accounts (Trading, Profit & Loss Account and Balance Sheet)

Try these first

1. 1.

   What does the Trading Account determine?

   Hint

   Focus on the sales and direct costs.

2. 2.

   What is the basic equation of a Balance Sheet?

   Hint

   Consider the different components of financial statements.

3. 3.

   What is the primary purpose of the Trading Account?

   • To find net profit
   • To find gross profit
   • To evaluate balance

   Hint

   Focus on the direct expenses related to sales.

4. 4.

   True or False: The Profit and Loss Account includes direct expenses.

   • True
   • False

   Hint

   Consider where each type of expense is recorded.

5. 5.

   A company has sales of ₹400,000, purchases of ₹200,000, gross salary expenses of ₹80,000, and other indirect expenses of ₹15,000. The closing stock is ₹50,000. Calculate Net Profit.

   Hint

   Work through Gross Profit first and subtract all expenses afterward.

6. 6.

   A business has an outstanding expense of ₹10,000 for the current period and prepaid expenses of ₹5,000 from last year. What impact do these adjustments have on the Profit and Loss Account and Balance Sheet?

   Hint

   Consider how timing affects the financial statements.