Preparation of Final Accounts of the Company
The following points should be considered while preparing final accounts of the company:
1. Proper Format- Final accounts of a company contains balance sheet at first and then the profit and loss account and are according to the format perscribed in the Companies Act.
2. Preparation of Trial Balance- If the items related to final accounts are not shown at the debit and credit side of the trial balance then a trial balance shall be prepared before the final accounts, so as to tally all the balances.
3. Suspense Account- If the debit and credit side of the trial Balance do not match, the difference amount shallnbe shown as the Suspense Account, which shall be rectified when the errors are known.
4. Items shown in the Trial Balance- Items of the trial balance shall be shown only at one place in the final accounts. Items having debit balance shall be shown either at the debit side of profit and loss account or profit and loss appropriation or shall be added at the assets side of the balance sheet or deducted on the opposite side whereas items with credit balances are shown at the credit side of thenprofit and loss account or appropriation account or added at the liabilities side or deducted at the opposite side.
5. Adjustments- Additional information apart from the trial balance shall be adjusted with the respective items and at two places in such a way that its effect on debit credit is equal.
Use of Accounting Standards for Preparation of Final Accounts
Final Accounts of a company should be prepared
according to the standard fixed by Accounting Standards Board of the Institute of Chartered Accountants of India. The auditor should also mention in his report, whether the accounting standards issued by the Accounting Standards Board have been adhered to or not.