I am a 11th commerce student preparing for boards. Can someone please explain the difference between Final accounts and Balance sheet and when each is prepared? I am having difficulty understanding this.
Final Account is prepared at the end of the accounting year which shows the profit or loss for the year. It consists of Trading account, Profit and Loss account and Balance sheet. Balance sheet is prepared on a particular date which shows the financial position of the business as on that date. It shows what the business owns and what it owes. Hope this helps!
Final accounts give you profits for the year while balance sheet shows assets , liabilities and capital as on a particular date. Final accounts shows how much profit has been earned while balance sheet shows the financial condition of the business.
Final Account is prepared to find out the Profit or Loss for an accounting period. Balance Sheet is prepared to ascertain the financial position of a business on a particular date. Final Account includes the Trading Account and Profit and Loss Account. Balance Sheet consists of Assets, Liabilities and Capital. Hope this clarifies!
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