Ch 4 · Final Accounts of Sole Proprietors

5 concept points · 4 formulas · 4 exam-critical points.

📘 Core concepts

• 1Final Accounts = Trading A/c + Profit & Loss A/c + Balance Sheet.
• 2Trading A/c shows Gross Profit/Loss; P&L A/c shows Net Profit/Loss.
• 3Adjustments (outstanding, prepaid, accrued, depreciation, bad debts) ensure matching principle.
• 4Closing stock valued at cost or NRV, whichever is lower (AS-2).
• 5Capital + Net Profit − Drawings = Closing Capital.