Final Accounts & Balance Sheet

The ultimate financial snapshot.

Two Main Statements

1. Profit & Loss Account (Income Statement)

Shows: Profit or Loss for a period

Format:

Revenue/Sales         1,00,000
(-) Cost of Goods      (60,000)
Gross Profit            40,000
(-) Operating Exp      (20,000)
Net Profit              20,000

2. Balance Sheet

Shows: Financial position on specific date

Format:

ASSETS                LIABILITIES + EQUITY
Cash        30,000    Capital        50,000
Inventory   40,000    Loan           30,000
Equipment   10,000    Profit (P&L)   20,000
──────────            ──────────────────────
Total       80,000    Total          1,00,000

Wait, it doesn't balance? Check again!

Assets = Liabilities + Equity ALWAYS!

Reading Balance Sheet

Strong company: High assets, low liabilities Weak company: High debt, low equity

Quiz

Test Your Knowledge

Key Takeaway: Understanding Final Accounts & Balance Sheet is essential for making informed financial decisions.