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.

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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.

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Chapter contents

The NCERT structure, section by section. Open a section to see its questions, then read the concept-first solution.

Overview

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.

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