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Final accounts of companies - Class 12 Video Lecture - Commerce
FAQs on Final accounts of companies - Class 12 Video Lecture - Commerce
| 1. What are final accounts of companies? |  |
Ans. Final accounts of companies refer to the financial statements prepared at the end of the accounting period, usually a year. These accounts include the trading account, profit and loss account, and balance sheet, which provide a summary of the company's financial performance, profitability, and financial position.
| 2. What is the purpose of preparing final accounts of companies? | |
Ans. The main purpose of preparing final accounts of companies is to provide stakeholders, such as investors, creditors, and shareholders, with information about the company's financial performance and position. These accounts help in assessing the profitability, liquidity, and solvency of the company, aiding in decision-making and evaluating its financial health.
| 3. What is included in the trading account of final accounts? | |
Ans. The trading account of final accounts includes all the direct expenses, direct incomes, and the cost of goods sold. It helps in determining the gross profit or loss of the company by comparing the sales revenue with the cost of goods sold. The trading account is the first part of the final accounts and provides insights into the company's core business operations.
| 4. How is the profit and loss account prepared in final accounts? | |
Ans. The profit and loss account in final accounts is prepared by summarizing all the indirect expenses, indirect incomes, and the gross profit or loss calculated from the trading account. It shows the net profit or loss of the company after considering all operating expenses, non-operating incomes, and expenditures. The profit and loss account helps in evaluating the profitability of the company.
| 5. What does the balance sheet represent in final accounts? | |
Ans. The balance sheet in final accounts represents the financial position of the company at a particular point in time. It includes all the assets, liabilities, and shareholders' equity of the company. The balance sheet provides information about the company's liquidity, solvency, and overall financial stability. It is a snapshot of the company's financial health and helps in assessing its long-term viability.
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Nov 16, 2024 Last updated |
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