Notes compiled by Prof. M.B.

Thakoor

MMS Final Accounts

FINAL ACCOUNTS
Final Accounts are the accounts prepared at the end of financial year which shows the profit / loss made by the concern & its financial position of its business.
For Manufacturing Ltd. Co. 1) 2) 3) 4) 5) Dr. Manufacturing A/c. Trading A/c. Profit & Loss A/c. A/c. Appropriate Balance Sheet Final A/c. consist of (Nominal A/c.) (Nominal A/c.) (Nominal A/c.) (Nominal A/c.) (Not an A/c. but a statement) Cr. xxx xxx

Manufacturing Account for the year ended 31.12. xx By Sale of scrap By Closing W.I.P.

To Opening work-in progress To Consumption of Raw Material Or To Raw material consumed Opening stock of R.M. xx Add: Net purchases xx i.e. purchase xx (-) P/R xx xx Less: Closing Stock of RM xx To Direct Wages / Productive Wages / Labour To Carriage inward To Royalty To Royalty on production To Demurrage To Depreciation on Plant & Mach. To Factory Heating & lighting To Factory Rent, Rate & Taxes To Factory Mgr./works Mgr. To Factory Mgr./W.Mgr Salary OR Commission To Hire of Special Plot To Factory Supervisor Salary To Repair to Plant / Factory To Gas, Electricity, Water/Factory To Octroi on R.M. Purchased To Factory Insurance To Primary Packing Material exp. To Oil & Grease Consumed To Dock Charges To Factory / works exps. To Excise duty To Clearing Charges To Import / custom duty Notes compiled by Prof. M.B. Thakoor

By Cost of Goods produced or Cost of Production (B/F) xx xx xx xx xx xx xx xx xx xx xx xx xx xx xx xx xx xx xx xx xx xx xx

xxx

Pg. 1

Notes compiled by Prof. M.B. Thakoor xx xx Trading Account for the year ended xx xx xx xx xx xx xx xx Dr. By Sales ( - ) S/Return

MMS Final Accounts xx Cr. xx xx Xx xx

Dr. To Opening Stock of F.G. To Purchase of F.G. Less: Return F.G. To Carriage on F.G. To Cost of production b/d. To Gross Profit c/d *(B/P)

By Closing stock of FG By Gross loss c/d. (B/F)* * = OR

xx Cr. xx xx xx xx

Profit & Loss Account for the year ended (Concise) xx xx xx xx By Gross Profit * b/d. By Dividend Received By Int. on Invest Recover By Net Loss c/d. (b/f) * * = OR

To Gross Loss b/d. To Office & Adm. Exp. To Financial exp. To Selling & Distribution exp. To Old bad debt (TB) xx Add: New Bad debt (Adj.) xx Add: New RDD (Adj) xx xx Less: Old RDD (TB) xx To Provision for taxation To Net Profit C/d.*

xx xx xx xx

xx Cr. xxx xxx xxx xxx xxx xxx xxx xxx

THE ABOVE PROFIT & LOSS A/C. CAN BE DETAILED AS UNDER : Dr. PROFIT & LOSS A/C. FOR THE YEAR ENDED To Gross loss* To Office & administration exp. To Office Salaries To Salaries & wages To Office Rent To Unproductive wages To Office lighting & heating To Office Repairs To Office maintainance To Insurance To Postage & telegram To Trade expenses To Sundry expenses or To General expenses or To Office expenses or To Miscellaneous expenses To Refreshment to office staff To Depreciation on Office Assets To Travelling & conveyance To Audit Fees To Accountancy charges To legal charges Notes compiled by Prof. M.B. Thakoor xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx By Gross Profit* By Commission Recd. By Rent recd. By Interest on Investment By Interest on Bank deposit By Disc. Recd. / Earned By Miscellaneous income By Provision for disc. On creditor By Old RDD (TB) xxx Less: New RDD (Adjustment) xxx xxx Less: New Bad Debts (Adj.) xxx xxx Less: Old bad debts (TB) xxx By Net Loss (Balancing figure)* xxx xxx xxx xxx xxx xxx * = OR

xxx xxx

Pg. 2

Notes compiled by Prof. M.B. Thakoor Or To law charges To Office Mgr./HRD Mgr. Salary To Telephone Charges To Financial Exp. To Interest allowed To Interest on over draft To Bank Charges To Interest on loan To Selling & Distribution Exp. To Disc. On debtors To Carriage outward or To Carriage on Sales To Export duty To Forwarding charges To Advertisement & Publicity To Royalty on Sales To Sales Mgr. commission To Salesman commission To Commission allowed To Sales Manager salary To Salesman Salary To Delivery van exp. To Depn. On Delivery Van To Showroom exp. To Godown Rent To Travelling exp To Other selling & Distribution Exp.. To Old Bad debts (TB) xxx Add: New bad debts (Adj.) xxx Add: New RDD (Adj.) xxx xxx Less: Old RDD (TB) xxx To Net Profit C/d.* TOTAL

MMS Final Accounts

xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx

xxx xxx XXXX TOTAL XXXX

Notes: 1) The Gross Profit / Gross Loss will be brought down to P & L A/c. 2) If the old RDD is greater than the sum total of Bad-debts & New RDD then it must be written on credit side By excess provision for Bad & doubtful debt) 3) We may either get Net Profit or Net Loss in the P & L A/c. as If the difference is on debit side, it is Net Profit. & If the difference is on credit side, it is Net Loss. & the same is to be Transferred to Profit & Loss appropriation A/c. 4) Royalty given in Trial Balance will go to Trading A/c. but Royalty on sales will go to P&L A/c and Royalty on purchase of Assets will be added to the Concerned Assets and then depreciation will be calculated. 5) Trade expenses will go to P & L A/c. Debit side but if in the Trial Balance we are given, General / Sundry / Office / Miscellaneous expenses then trade exp. Will go trading A/c. The following points are worth noted: 1) Import duty will go to Manufacturing / Trading A/c. but export duty will go to P & L A/c. Notes compiled by Prof. M.B. Thakoor Pg. 3

Notes compiled by Prof. M.B. Thakoor 2) 3) 4) 5) 6) 7) 8) 9) 10)

MMS Final Accounts

Clearing charges will go to Manufacturing / Trading A/c, but forwarding charges will go to P & L A/c. Carriage inward will go to Manufacturing / Trading A/c. but carriage outward will go to P & L A/c. Factory rent go to Manufacturing A/c, but office rent or simple rent will go P & L A/c. Factory supervisor salary will go to Manufacturing a/c. but office supervisor salary will go to P&L A/c. Factory Manager salary will go to Manufacturing A/c, but office manager salary will go to P&L A/c. Productive wage will go to Manufacturing. A/c. but unproductive wage will go to P&L A/c. Works expenses go to Manufacturing A/c. but office expenses go to P&L A/c. Factory insurance go to Manufacturing A/c. but only Insurance / office insurance go to P&L A/c. Depreciation go to P&L A/c. or Manufacturing A/c. as the case may be. Provision for depreciation given in Trial balance will go to Balance Sheet Asset side as a deduction from Asset. Profit & Loss Appropriate Account for the year ended 31.12. By Bal. b/d. By N. P.c/d xx xx xx xx xx xx 0 Cr.

Dr.

To Prop. Dividend (1) on pref. share xx (2) on equity share xx To transfer to G.R. To Bal c/d. (B/f.) to Reserve & Surplus

xx

Notes compiled by Prof. M.B. Thakoor

Pg. 4