Preparation Of Financial

Statements
By – Aniruddha Gachake
Associate Professor
Banglore School Of Business
Nagpur Campus
Mobile No - 9423671642
 Financial Statements
• Statements related to the financial aspects
of the organisation are financial
statements.
Financial Aspects

Profitability Financial Position

 Profitability

• To measure the profitability of the

organization following statements are
prepared –
• Manufacturing Account / Trading Account
• Profit And Loss Account.
 Manufacturing / Trading Account
• Manufacturing Account is prepared by manufacturing concerns.
Trading Account is prepared by trading concerns.

Particulars Amount Particulars Amount

To Opening Stock Xxx By sales Xxx

To Purchases Xxx By Closing Stock xxx
To wages Xxx
To Carriage inwards Xxx
To Octori Xxx
To manufacturing Expsesnces xxx

To Gross profit xxx

xxx xxx
 Profit And Loss Account
• Profit and loss account is prepared to find out the net profit of the
organization. All the indirect expenses are debited to profit and loss
account.
Particulars Amount Particulars Amount

To Salary By gross profit

To Interest By commission
To Stationery and printing expenses By discount
To Electricity expenses By interest
To Bad debts By rent
To Depreciation
To Advertising expenses
To Discount
To Carriage outward
To Factory expenses
To Repairs
To rent
To commission
To legal charges
To travelling expenses
To general expenses
To loss on sale of fixed assets
To loss by theft
To net profit
 Balance Sheet
• Balance sheet depicts the financial position on a particular date.
Amount
Liabilities Amount Assets

Capital Cash in hand

Bank loan Cash at bank
Creditors Furniture
Outstanding expenses Land and building
Bank overdraft Machinery
Bills payable Plant
Income received in advance Prepaid expenses
General reserve Debtors
Profit and loss account Closing stock
Bills receivable
Furniture and fixture
Loans and advances
Goodwill

xxx
xxx

• Adjustments in Profit & Loss Accounts and Balance sheet.
Item
1. Closing stock
2. Depreciation on assets
3. Bad and doubtful debts
4. Outstanding Expenses
5. Prepaid expenses
6. Transfer to general reserve
7. Dividend
8. Accrued Income
Adjustments
Balance Sheet
Trading and Profit and loss account
Trading Account - credit Assets
Profit and loss account - Debit Deduct from assets.
Deduct from debtors.
Profit and loss account - Debit
Liabilities
Add in the particular expense on debit side of
Profit and loss account. Assets
Deduct from the particular expense on the
Debit side of profit and loss account.
Profit and loss appropriation account - debit Liabilities
Profit and loss appropriation account - debit Liabilities
Assets
Profit and loss account - credit