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Final Accounts (CA/CMA) Video Lecture - Commerce

FAQs on Final Accounts (CA/CMA) Video Lecture - Commerce

1. What are final accounts in commerce?

Ans. Final accounts in commerce refer to the financial statements prepared at the end of an accounting period to summarize the financial performance and position of a business. These accounts include the income statement, balance sheet, and cash flow statement.

2. What is the purpose of preparing final accounts?

Ans. The purpose of preparing final accounts is to provide stakeholders with a clear understanding of the financial position and performance of a business. These accounts help in assessing profitability, liquidity, solvency, and overall financial health. They are also used for decision-making, tax compliance, and external reporting purposes.

3. How are final accounts prepared?

Ans. Final accounts are prepared by following a systematic process that involves several steps. Firstly, all financial transactions are recorded in the books of accounts. Then, the trial balance is prepared to ensure the accuracy of the recording. Next, adjustments are made for accruals, prepayments, depreciation, etc. After that, the adjusted trial balance is prepared, and the financial statements are derived from it, including the income statement, balance sheet, and cash flow statement.

4. What is the difference between an income statement and a balance sheet?

Ans. An income statement, also known as a profit and loss statement, shows the revenues, expenses, and net income or loss of a business over a specific period. It highlights the profitability of the business. On the other hand, a balance sheet provides a snapshot of the financial position of a business at a specific point in time. It presents the assets, liabilities, and owner's equity of the business and helps in assessing its liquidity and solvency.

5. Why is it important to analyze final accounts?

Ans. Analyzing final accounts is crucial as it helps in evaluating the financial performance and position of a business. It provides insights into the profitability, liquidity, and solvency of the business. By analyzing these accounts, stakeholders can make informed decisions, identify areas for improvement, compare performance with industry benchmarks, and assess the overall financial health of the business.

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Oct 02, 2025 Last updated

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