Financial Statements – Business Management

Financial statements are prepared to ascertain the profit or loss of the business, and to know the financial position of the company.

Trading, profit & Loss accounts ascertain the net profit for an accounting period and balance sheet reflects the position of the business.

All the above has almost a fixed format, just put all the balances of ledger accounts into the format given below with the help of the trial balance. With that, we may derive desired results in the shape of financial equations.

Trading & Profit & Loss Account of M/s ABC LimitedFor the period ending 31-03-2014
Particulars	Amount	Particulars	Amount
To Opening Stock	XX	By Sales	XX
To Purchases	XX	By Closing Stock	XX
To Freight charges	XX	By Gross Loss c/d	XXX
To Direct Expenses	XX
To Gross Profit c/d	XXX
Total	XXXX	Total	XXXX

To Salaries	XX	By Gross Profit b/d	XXX
To Rent	XX
To Office Expenses	XX	By Bank Interest received	XX
To Bank charges	XX	By Discount	XX
To Bank Interest	XX	By Commission Income	XX
To Electricity Expenses	XX	By Net Loss transfer to Balance sheet	XX
To Staff Welfare Expenses	XX
To Audit Fees	XX
To Repair & Renewal	XX
To Commission	XX
To Sundry Expenses	XX
To Depreciation	XX
To Net Profit transfer to Balance sheet	XX
Total	XXXX	Total	XXXX

Balance sheet of M/s ABC Limitedas on 31-03-2014
Liabilities	Amount	Assets	Amount
CapitalXXAdd:Net ProfitXX	XX	Fixed AssetsXXXXLess:DescriptionXX	XX
Bank Borrowings	XX	Current Assets –
Long Term Borrowing	XX	Stock	XX
Current Liabilities –		Debtors	XX
Advance Form Customers	XX	Cash In hand	XX
Sundry creditors	XXX	Cash at Bank	XX
Bills Payable		Bills receivables	XX
Expenses Payable
Total	XXXX	Total	XXXX

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