Accountancy · Class 11 Commerce
Ch 13Final Accounts of Sole Proprietors – II — Class 11 Accountancy, concept-first.
The previous chapter (Final Accounts of Sole Proprietors – I) prepared Final Accounts directly from a Trial Balance, assuming every transaction was already fully and correctly recorded by the closing date.
Key concepts
Hover a concept to preview it and jump to its most relevant Q&A.
Outstanding and Prepaid Expenses
Outstanding Expense (incurred but not yet paid) is ADDED to the relevant expense in the PL Account and shown as a Current Liability.
Most relevant Q&A
- Rent outstanding for the current year, given as an adjustment, should be: (A) Added to Rent in the P&L Account and shown as a Current Asset…Free
- Insurance premium paid during the year includes ₹2,000 relating to the period after the accounting year ends. This ₹2,000 should be: (A) Ded…Free
- A pre-payment of insurance premium will appear in : (a) The balance sheet, on the assets side (b) The trading account, on the debit side (c)…Preview
- What is Prepaid Expenses ?Preview
- Pass adjusting entries for the following: (a) The closing stock was valued at ₹5,000 (b) Outstanding salaries ₹150 (c) Insurance prepaid ₹45…Preview
Chapter contents
The NCERT structure, section by section. Open a section to see its questions, then read the concept-first solution.
Overview
The previous chapter (Final Accounts of Sole Proprietors – I) prepared Final Accounts directly from a Trial Balance, assuming every transaction was already fully and correctly recorded by the closing…
Meaning and Need for Adjustments
Adjustments are year-end entries passed to correctly recognise income and expenses in the period to which they relate, and to correctly state assets and liabilities as on the closing date — regardless…
Closing Stock as an Adjustment
When Closing Stock is given INSIDE the Trial Balance (as in the previous chapter), it means it has already been recorded through a Purchases-adjustment entry, and it goes ONLY to the Balance Sheet, no…
Outstanding Expenses and Prepaid Expenses
Meaning: an expense that has been INCURRED during the year (the benefit has been consumed) but has NOT yet been PAID by the closing date — e.g. wages for the last week of March, unpaid at year end.
Accrued Income and Income Received in Advance
Meaning: income that has been EARNED during the year but not yet RECEIVED by the closing date — e.g. interest on a fixed deposit earned for the year but credited by the bank only in the following mont…
Depreciation on Fixed Assets
Meaning: the portion of a fixed asset's cost that is consumed, used up, or allocated as an expense during the current accounting year, reflecting the wear and tear (or the passage of useful life) the…
Bad Debts, Provision for Doubtful Debts and Provision for Discount on Debtors
Sometimes, AFTER the Trial Balance has already been drawn up, the business discovers that a further amount owed by a debtor has become irrecoverable.
Interest on Capital and Interest on Drawings
Meaning: interest allowed to the proprietor on the capital invested in the business, treated as a business expense (compensating the owner for the opportunity cost of tying up funds in the business) e…
Goods Lost by Fire/Theft and Goods Distributed as Free Samples
Meaning: goods forming part of the business's stock are destroyed or stolen during the year — an ABNORMAL loss, unrelated to normal trading, that must be kept OUT of the ordinary Gross Profit calculat…
Worked Illustration — Final Accounts with Multiple Adjustments
From the following Trial Balance of a sole trader as on 31st March 2024, prepare the Trading and Profit and Loss Account for the year ended 31st March 2024 and the Balance Sheet as on that date, after…
Sample & Board Papers
Sample papers and previous-year board questions for this subject.
+−Show 12 questionsHide questions12 questions
- Q1What are accrued incomes ?Preview
- Q2What are adjusting entries ?Preview
- Q3A pre-payment of insurance premium will appear in : (a) The balance sheet, on the assets side (b) The trading account, on the debit side (c)…Preview
- Q4The trial balance of a trader on December 31st 2016, shows sundry debtors as ₹ 50,000. Adjustments : (a) Write off ₹ 1,000 as bad debts (b)…Preview
- Q5If there is no existing provision for doubtful debts, provision created for doubtful debts is ______. (a) Credited to Bad debts account (b)…Preview
- Q6What is Bad debts ? Give the Adjusting Entry for it.Preview
- Q7(a) Given below are the balances extracted from the books of Nagarajan as on 31st March, 2016. | Particulars | Rs. | Particulars | Rs. | | -…Preview
- Q8If there is no existing provision for Doubtful debts, provision created for Doubtful debts is : (a) Credited to Bad debts account (b) Debite…Preview
- Q9What is Prepaid Expenses ?Preview
- Q10An abstract of the Trial Balance as on 31st December 2022 is as follows : Sundry debtors ₹ 60,000, Bad debts ₹ 1,500 Adjustment : Create a p…Preview
- Q11Accrued interest on investment will be shown (a) On the credit side of profit and loss account (b) On the assets side of balance sheet (c) B…Preview
- Q12Pass adjusting entries for the following: (a) The closing stock was valued at ₹5,000 (b) Outstanding salaries ₹150 (c) Insurance prepaid ₹45…Preview
More questions
10 Q+−Show 7 questionsHide questions7 questions
- Q1Rent outstanding for the current year, given as an adjustment, should be: (A) Added to Rent in the P&L Account and shown as a Current Asset…Free
- Q2Insurance premium paid during the year includes ₹2,000 relating to the period after the accounting year ends. This ₹2,000 should be: (A) Ded…Free
- Q3Commission received during the year includes ₹3,000 relating to services to be rendered next year. The correct treatment of this ₹3,000 is:…Free
- Q4Furniture stands at ₹60,000 in the Trial Balance. Depreciation is to be charged at 10% per annum. In the final accounts, this is shown as: (…Preview
- Q5A Trial Balance shows Sundry Debtors ₹1,00,000 and an existing Provision for Doubtful Debts (Cr.) of ₹4,000. Adjustments require writing off…Preview
- Q6Interest on Capital allowed to the proprietor is: (A) Debited to P&L Account and credited to Capital Account (B) Credited to P&L Account and…Preview
- Q7Goods costing ₹20,000 were destroyed by fire; the insurance company admitted a claim of only ₹14,000. The amount debited to the Profit and L…Preview
+−Show 3 questionsHide questions3 questions
- Q8From the following Trial Balance of a trader as on 31st March 2024, prepare the Trading and Profit and Loss Account for the year ended 31st…Free
- Q9From the following Trial Balance of a trader as on 31st March 2024, prepare the Trading and Profit and Loss Account for the year ended 31st…Preview
- Q10From the following Trial Balance of a trader as on 31st March 2024, prepare the Trading and Profit and Loss Account for the year ended 31st…Preview