6 Questions
Which financial statements are typically included in a final account?
Balance sheet, income statement, and retained earnings statement
What is the purpose of a final account?
To summarize a company's financial performance over a specific period
What is the purpose of a final account?
To determine the financial position and performance of a business
What is the main difference between a trading account and a profit and loss account?
The trading account focuses on the cost of goods sold, while the profit and loss account covers all revenue and expenses
Which financial statements are typically included in a final account?
Trading account, profit and loss account, and balance sheet
What is the main difference between a trading account and a profit and loss account?
The trading account shows the gross profit or loss, while the profit and loss account shows the net profit or loss
Study Notes
Final Account
- A final account typically includes three financial statements: Balance Sheet, Profit and Loss Account, and Cash Flow Statement.
Purpose of a Final Account
- The purpose of a final account is to provide stakeholders with a comprehensive picture of a company's financial performance and position over a specific period.
Trading Account vs Profit and Loss Account
- The trading account presents the result of buying and selling goods, focusing on the direct cost of goods sold and direct revenue.
- The profit and loss account, on the other hand, presents the overall performance of the business, including both direct and indirect costs and revenues.
Test your knowledge of final accounts with this quiz! Learn about the purpose of final accounts, the financial statements typically included, and the main difference between a trading account and a profit and loss account. Perfect for accounting students or professionals looking to sharpen their skills.
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