PPT: Final Accounts of Non-Manufacturing Entities

 Page 1


Final Accounts of 
Non-Manufacturing 
Entities
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Final Accounts of 
Non-Manufacturing 
Entities
I n t r o d u c t io n
Non-manufacturing entities are businesses that buy and sell goods for profit without altering their form or use. 
These entities operate by selling products in their original condition and incur various liabilities, create assets, 
and incur expenses such as salaries, stationery, advertising, and rent to manage their operations.
At the end of the accounting year, they prepare financial statements to determine the business's income and 
financial position.
Page 3


Final Accounts of 
Non-Manufacturing 
Entities
I n t r o d u c t io n
Non-manufacturing entities are businesses that buy and sell goods for profit without altering their form or use. 
These entities operate by selling products in their original condition and incur various liabilities, create assets, 
and incur expenses such as salaries, stationery, advertising, and rent to manage their operations.
At the end of the accounting year, they prepare financial statements to determine the business's income and 
financial position.
Financial Statements
Income Statement
Trading Account
Gross Profit or Gross Loss
Profit & Loss Account
Net Profit or Net Loss
Position Statement
Balance Sheet
Assets & Liabilities
Financial Statements are organized summaries of all the accounts in the ledger. They are created to provide 
clear information about the financial situation and performance of a business.
The profit or loss of the enterprise is obtained through the preparation of Income Statement i.e. Trading and 
Profit & Loss A/c. The financial position is evaluated through the Position Statement, commonly known as the 
Balance Sheet.
Page 4


Final Accounts of 
Non-Manufacturing 
Entities
I n t r o d u c t io n
Non-manufacturing entities are businesses that buy and sell goods for profit without altering their form or use. 
These entities operate by selling products in their original condition and incur various liabilities, create assets, 
and incur expenses such as salaries, stationery, advertising, and rent to manage their operations.
At the end of the accounting year, they prepare financial statements to determine the business's income and 
financial position.
Financial Statements
Income Statement
Trading Account
Gross Profit or Gross Loss
Profit & Loss Account
Net Profit or Net Loss
Position Statement
Balance Sheet
Assets & Liabilities
Financial Statements are organized summaries of all the accounts in the ledger. They are created to provide 
clear information about the financial situation and performance of a business.
The profit or loss of the enterprise is obtained through the preparation of Income Statement i.e. Trading and 
Profit & Loss A/c. The financial position is evaluated through the Position Statement, commonly known as the 
Balance Sheet.
Comparison Between Income Statement and 
Position Statement
Income Statement
Shows profit or loss for a financial period through 
two components:
Trading Account
Profit and Loss Account
Calculates net profit/loss by deducting all expenses 
from revenue earned.
Position Statement
Presents assets and liabilities at the financial year-
end. Provides a snapshot of what the business owns 
and owes at a specific point in time.
May be supplemented by Cash Flow Statement and 
Statement of Changes in Equity (non-mandatory for 
non-corporate entities).
Page 5


Final Accounts of 
Non-Manufacturing 
Entities
I n t r o d u c t io n
Non-manufacturing entities are businesses that buy and sell goods for profit without altering their form or use. 
These entities operate by selling products in their original condition and incur various liabilities, create assets, 
and incur expenses such as salaries, stationery, advertising, and rent to manage their operations.
At the end of the accounting year, they prepare financial statements to determine the business's income and 
financial position.
Financial Statements
Income Statement
Trading Account
Gross Profit or Gross Loss
Profit & Loss Account
Net Profit or Net Loss
Position Statement
Balance Sheet
Assets & Liabilities
Financial Statements are organized summaries of all the accounts in the ledger. They are created to provide 
clear information about the financial situation and performance of a business.
The profit or loss of the enterprise is obtained through the preparation of Income Statement i.e. Trading and 
Profit & Loss A/c. The financial position is evaluated through the Position Statement, commonly known as the 
Balance Sheet.
Comparison Between Income Statement and 
Position Statement
Income Statement
Shows profit or loss for a financial period through 
two components:
Trading Account
Profit and Loss Account
Calculates net profit/loss by deducting all expenses 
from revenue earned.
Position Statement
Presents assets and liabilities at the financial year-
end. Provides a snapshot of what the business owns 
and owes at a specific point in time.
May be supplemented by Cash Flow Statement and 
Statement of Changes in Equity (non-mandatory for 
non-corporate entities).
Preparation of Final Accounts
The main purpose of final accounts, which include the Trading Account, Profit and Loss Account, and Balance 
Sheet, is to accurately and fairly present the performance and financial position of a business.
Capital and Revenue 
Distinction
It is important to differentiate 
between capital and revenue 
receipts and payments.
Period Separation
Income and expenses pertaining to 
different accounting periods should 
be separated.
Significant Heads
Different items of income and 
expenditure should be 
accumulated under significant 
heads to disclose the sources of 
capital and nature of outstanding 
liabilities.