Preparation of Final Accounts
Chapter notes, video classes, MCQ practice tests and quick-revision one-liners for Accounting and Financial Management for Bankers — JAIIB.
One-liners from this chapter
Free sample — 8 of 84 rapid-fire Q&A cards.
What is the primary purpose of adjustment entries in final accounts?
Convert raw trial-balance figures to accrual basis, showing true and fair view of profitability.
How many Balance Sheet and P&L accounts must an adjustment entry touch?
Exactly ONE Balance Sheet account AND ONE P&L account; touching two of same type is error.
Define adjustment entries in accounting.
Period-end entries converting records to accrual basis; reflect no fresh transaction, only correct allocation.
Why is Rent Expense adjusted if paid in next month?
Matching Concept: period expenses must match period revenues; unpaid rent must accrue in current period.
What is the Profit & Loss Account's primary objective?
Ascertain Net Profit or Net Loss of business for the accounting period using accrual basis.
On what principle is the P&L Account prepared?
Accrual basis: all incomes and expenses of period included regardless of cash movement.
Define the Profit & Loss Appropriation Account.
Shows distribution of net profit among partners/reserves/dividends/tax adjustments; opened after P&L closed.
Distinguish P&L Account from P&L Appropriation Account.
P&L shows operational profit/loss; Appropriation shows non-operational use of profit (reserves, dividends).
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