SAQs FROM FINAL ACCOUNTS CHAP

 SBSIRCommerce Present 

Here are 10 Short Answer Questions (SAQs) with answers from the "Final Accounts" chapter of Accountancy:

1. What are Final Accounts?

   *Final accounts refer to the financial statements prepared at the end of an accounting period to ascertain the profit or loss and financial position of a business. They include the Trading Account, Profit & Loss Account, and Balance Sheet.*

2. What is a Trading Account?

   *A Trading Account is prepared to calculate the gross profit or gross loss of a business during a specific period. It includes revenues and expenses related to the purchase and sale of goods.*

3.What is a Profit & Loss Account?

   *A Profit & Loss Account is prepared to determine the net profit or net loss of a business by taking into account all indirect expenses and revenues after calculating the gross profit or loss from the Trading Account.*

4. What is a Balance Sheet?

   *A Balance Sheet is a financial statement that shows the financial position of a business by listing its assets, liabilities, and owner’s equity as on a specific date.*

5. What is Gross Profit?

   *Gross profit is the difference between the revenue from sales and the cost of goods sold (COGS) in the Trading Account.*

6. What is Net Profit?

   *Net profit is the final profit after deducting all operating expenses, interest, taxes, and other expenses from the gross profit, determined in the Profit & Loss Account.*

7. Why is Closing Stock shown in both the Trading Account and the Balance Sheet?

   *Closing stock is shown in the Trading Account to adjust the cost of goods sold, and in the Balance Sheet under current assets to reflect its value at the end of the accounting period.*

8. What are Prepaid Expenses? How are they shown in Final Accounts?

   *Prepaid expenses are expenses paid in advance for the next accounting period. They are shown as current assets in the Balance Sheet.*

9. What is a Provision for Bad Debts?

   *A provision for bad debts is an estimated amount set aside from the profit to cover any potential bad debts. It is shown as an expense in the Profit & Loss Account and as a deduction from debtors in the Balance Sheet.*

10. What is the purpose of a Trial Balance in the preparation of Final Accounts?

   *A trial balance is prepared to ensure that the total of debit balances equals the total of credit balances, helping in the detection of any errors and serving as the basis for 

the preparation of Final Accounts.*