Ch 4 · Final Accounts of Sole Proprietors

📘 Core concepts

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