Final accounts refer to the financial statements prepared by a business at the end of an accounting period. These statements provide a summary of the firm's financial activities and help in assessing its profitability and financial position. In the case of a proprietorship firm, the final accounts include the following:


The trading account is prepared to determine the gross profit or loss of a business. It includes the following items:
- Opening stock
- Purchases
- Direct expenses
- Closing stock


The profit and loss account shows the net profit or loss of the business after considering all indirect expenses and incomes. The items included in this account are:
- Indirect expenses (e.g., rent, salaries, advertising)
- Indirect incomes (e.g., interest received, commission earned)
- Net profit or loss


The balance sheet gives a snapshot of the firm's financial position at a specific date. It includes the following items:
- Assets (e.g., cash, accounts receivable, inventory, fixed assets)
- Liabilities (e.g., accounts payable, loans, capital)
- Capital (owner's investment)
- Drawings (withdrawals by the proprietor)


Certain adjustments may be necessary to ensure the accuracy of the final accounts. These adjustments include:
- Depreciation of fixed assets
- Provision for bad debts
- Accrued income
- Prepaid expenses
- Outstanding expenses
- Unearned income


The final accounts of a proprietorship firm consist of the trading account, profit and loss account, and balance sheet. These statements provide a comprehensive view of the firm's financial performance and position. Adjustments may be made to ensure accuracy in the final accounts.