REMEDIAL CLASS 8 : FINANCIAL STATEMENTS OF SOLE PROPRIETORSHIP PART - I (DAY 10)

27th May, 2020

 HELLO BOYS!!

 CONTINUING WITH THE SAME METHODOLOGY, WE WILL HAVE ILLUSTRATIVE AND

INTERACTIVE CLASS WITH LOTS OF SHORT VIDEOS & IMAGES. THIS WILL HELP YOU

  TO HAVE A GOOD GRAB OF THE SUBJECT TOPIC.

Financial Statements of a Sole Proprietor- Meaning, Requirement, Purpose and Importance:

The financial statements comprise mainly the following two statements-

 1. Income Statements or Trading and Profit and Loss Account
2. Balance Sheet



Nature of Financial Statements

Purpose or Importance and Limitations of Financial Statements


Users of Financial Statements

The various users of financial statements are explained diagrammatically below-

Capital and Revenue Items and need for their Classification

WATCH THE VIDEO BELOW TO KNOW THE TYPES OF EXPENDITURE AND REVENUE






 


 



Procedure to Prepare Trading Account

 WATCH THE VIDEOS FOR PROBLEM 2 TRADING ACCOUNT

 LINK : TRADING ACCOUNT





Meaning of Profit and Loss Account



Format of Profit and Loss Account
Profit and Loss Account
for the year ended….
Dr.


Cr.
Particulars
Amount
Rs
Particulars
Amount
Rs
Gross Loss

Gross Profit

(transferred from Trading A/c)

(transferred from Trading A/c)

Office Expenses-

Rent (Cr.)

General Expenses

Rent from Tenant

Lighting

Discount Received

Salaries

  or Discount (Cr.)

Printing and Stationary

Dividend on Shares

Salaries and Wages

Interest on Investments

Rent, Rates and Taxes

Commission Received

Insurance

Income from other Sources

Establishment Expenses

Bad-Debts Recovered

Legal Charges

Miscellaneous Receipts

Audit Fees

Apprentice Premium

Telephone/Internet Charges

Profit on Sale of Assets

Postage and Telegram

**Net Loss transferred to Capital A/c

Trade Expenses



Travelling Expenses



Selling and Distribution Expenses-



Carriage Outwards, or



Carriage on Sales



Export duty



Stable expenses



Brokerage



Advertisement



Bad Debts



Packing Charges



Delivery Van Expenses



Commission



Miscellaneous Expenses 



Depreciation



Bank Charges



Discount



Donation and Charity



Repairs



Interest (Dr.)



Conveyance Expenses



Entertainment Expenses



Loss on Sale of Assets



**Net Profit transferred to Capital A/c











 **Either Net Profit or Net Loss will appear at one point of time.







Meaning of Balance Sheet




Format of Balance Sheet
Balance Sheet
as on year ended…
Liabilities
Amount
(Rs)
Assets
Amount
(Rs)
Capital
Fixed Assets
*Add: Net Profit
Goodwill
Add: Additional Capital introduced
Patents and Trademarks
Add: Interest on Capital
Live Stock
*Less: Net Loss
Land and Building
Less: Drawings made
Plant and Machinery
Less: Interest on Drawings
Equipment
Less: Income Tax
Furniture and Fixtures
Less: Life Insurance Premium
Motor Vehicles
Loose Tools
Fixed Liabilities
Freehold/Leasehold Premises
Long-term Loans
Business Premises
Mortgage
Loan from Bank
Neon Sign
Investments (Long-term)
Reserves and Provisions
Reserve Funds
Current Assets
General Reserve
Cash in Hand
Drought Fund
Cash at Bank
Provision for Tax
Stock or Inventory (Closing)
Contingency Reserve
Sundry Debtors or Book Debts
Bills Receivables
Current Liabilities
Investments (Short-term)
Sundry or Trade Creditors
Prepaid Expenses
Bills Payable
Accrued Income
Bank Overdraft
Loans Granted
Outstanding Expenses
Income Received in Advance
Fictitious Assets
Short-term Loans
Deferred Revenue Expenditure
Advertisement Suspense
Profit and Loss (Dr.)


*Either Net Profit or Net Loss is taken into consideration.




Grouping and Marshalling of Assets and Liabilities




      







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