The accounting cycle can be broken down into a few simplified steps.

Collect the source documents, like receipts or invoices, that need to be logged.

Record the transaction in the journal in chronological order.

Post the journal entries to the ledger accounts.

Prepare the trial balance. ...

Prepare the financial statements.

Understanding Final Accounts Without Adjustments
Final accounts are crucial for summarizing the financial performance and position of a business at the end of the accounting period. When preparing final accounts without adjustments, it simplifies the process.
Components of Final Accounts
- Trading Account:
- It shows the gross profit or loss.
- Formula: Gross Profit = Sales - Cost of Goods Sold (Opening Stock + Purchases - Closing Stock).
- Profit and Loss Account:
- It reflects the net profit or loss after deducting expenses from gross profit.
- Includes all income (like interest) and expenses (like salaries and rent).
- Balance Sheet:
- It presents the financial position of the business at a certain date.
- Lists assets, liabilities, and capital.
Steps to Prepare Final Accounts
1. Prepare the Trading Account:
- List all sales and purchases.
- Calculate the opening and closing stock.
- Derive the gross profit or loss.
2. Prepare the Profit and Loss Account:
- Start with the gross profit from the trading account.
- Add any other incomes.
- Deduct all expenses to find net profit or loss.
3. Prepare the Balance Sheet:
- List all assets, such as cash, inventory, and fixed assets.
- List all liabilities, including loans and creditors.
- Calculate owner’s equity using the formula: Capital = Assets - Liabilities.
Key Points to Remember
- Ensure all figures are taken from the ledger accurately.
- No adjustments mean not considering accrued or prepaid expenses, which simplifies calculations.
- Regularly review all accounts to ensure completeness and accuracy.
By following these guidelines, you can effectively prepare final accounts without adjustments, providing a clear financial picture of the business.