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Class 10 Account (Office Management and Accounting)
Chapter 8: Final Account
For SEE Board Exam Preparation: Complete guide with Very Short, Short, and Long (Numerical) exercise solutions
Welcome to the complete guide on Final Account. This chapter is highly essential for Class 10 Account (Office Management and Accounting) students preparing for their SEE board exams.
For official curriculum details regarding Final Account, you can visit the CDC Nepal Official Website.
Looking for more study materials? Explore our full collection of Class 10 Account Notes.
Secondary Education Examination (S.E.E.) Questions Pattern
| Types of Question | Marks | Number of Questions | Total |
|---|---|---|---|
| Very Short Answer Question | 1 | 1 | 1 |
| Short Answer Question | 5 | X | X |
| Long Answer Question (Numerical) | 8 | 1 | 8 |
| Total | — | 2 | 9 |
1. CDC Exercise Solutions
Very Short Answer Questions [1 Mark]
(1) What are the integral components of financial statements?
Answer: The main integral components of financial statements include the Trading Account, Profit & Loss Account, Profit & Loss Appropriation Account, and the Balance Sheet.
(2) Why is a Trading Account prepared?
Answer: A Trading Account is prepared to find the ‘Gross Profit’ or ‘Gross Loss’ by comparing the direct expenses and income related to the purchase, sale, and production of goods during a specific accounting period.
(3) What is a Profit & Loss Account? When is it prepared?
Answer: The account prepared by adjusting all indirect incomes and indirect expenses (administrative, selling and distribution, etc.) of the business to the Gross Profit or Loss in order to find the ‘Net Profit’ or ‘Net Loss’ is called the Profit & Loss Account. It is prepared at the end of the fiscal year.
(4) What is the primary basis for preparing a Balance Sheet?
Answer: The primary basis for preparing a Balance Sheet is the balances of assets, liabilities, and capital remaining in the Trial Balance, along with additional information (Adjustments).
(5) When is it necessary to make adjustments in financial statements?
Answer: When transactions such as outstanding expenses, prepaid payments, accrued income, depreciation, or closing stock are discovered after the Trial Balance has been prepared, adjustments are necessary to show the true financial position.
(6) What are Notes to Accounts?
Answer: The explanatory section placed at the end of financial statements (Balance Sheet and Profit & Loss Account) to disclose detailed descriptions of the figures included in them, the accounting policies used, and other important information is called Notes to Accounts.
2. Short Answer Questions (Theory) [5 Marks]
(a) What is a Final Account? Mention the objectives of preparing a Final Account. 5 Marks
Introduction to Final Account:
The collective term for the accounts and statements prepared at the end of each fiscal year to determine the actual financial results (profit or loss) and financial position (assets and liabilities) of a business is called a Final Account. This includes the Trading Account, the Profit & Loss Account, and the Balance Sheet.
Objectives of Preparing a Final Account:
The collective term for the accounts and statements prepared at the end of each fiscal year to determine the actual financial results (profit or loss) and financial position (assets and liabilities) of a business is called a Final Account. This includes the Trading Account, the Profit & Loss Account, and the Balance Sheet.
Objectives of Preparing a Final Account:
- 1. To find the Gross Profit or Gross Loss earned by the business during a specific period.
- 2. To ascertain the actual Net Profit or Net Loss obtained from running the business.
- 3. To show the true position of the assets, capital, and liabilities held by the business at the end of the fiscal year.
- 4. To provide the financial information required by investors, creditors, the government, and management.
- 5. To correctly determine the amount of income tax payable to the government.
(b) Write any five characteristics of a Final Account. 5 Marks
Five characteristics of a Final Account are as follows:
- 1. It is always prepared at the end of a fiscal year or accounting period (once a year).
- 2. It is prepared on the basis of the Trial Balance and Adjustments.
- 3. It presents both the profitability and the financial position of the business.
- 4. It fully adheres to the generally accepted principles and rules of the double-entry accounting system.
- 5. Under it, the Trading Account, the Profit & Loss Account, and the Balance Sheet are prepared sequentially in a chain.
(c) Give an introduction to the Trading Account and the Profit & Loss Account. 5 Marks
- Trading Account: The account prepared to find the Gross Profit or Loss (Gross Profit/Loss) by including only those incomes and expenses that are directly connected with the purchase, sale, and production of goods (such as opening stock, purchases, wages, carriage inward) is called the Trading Account.
- Profit & Loss Account: The account prepared to find the actual Net Profit or Net Loss (Net Profit/Loss) by carrying forward the Gross Profit/Loss from the Trading Account and then adjusting all indirect incomes (such as interest received, commission received) and indirect expenses (such as salary, rent, depreciation) of the business is called the Profit & Loss Account.
(d) What is a Balance Sheet? Why is it prepared? 5 Marks
Balance Sheet: The financial statement prepared on a specific date (usually the last day of the fiscal year) to present the true picture of the total assets, capital, and liabilities of a business is called a Balance Sheet. It is not an account but a Statement, and the total of its right and left sides is always equal.
Reasons for Preparation:
Reasons for Preparation:
- 1. To find the true financial position of the business (the state of assets and debts).
- 2. To assess the solvency (ability to repay debts) of the business.
- 3. To assist management in planning and setting strategies for the future.
3. CDC Numerical Solutions
(A) Prepare Trading and Profit & Loss Account [8 Marks]
Qns. I: Trading and P&L Account — Share Market Company 8 Marks
Question:
Based on the following closing balances of Share Market Company as at the end of Ashadh, prepare the Trading and Profit & Loss Account:
| Particulars | Amount (Rs.) | Particulars | Amount (Rs.) |
|---|---|---|---|
| Purchase | 5,00,000 | Salary | 2,18,000 |
| Purchase Return | 25,000 | Carriage Inward | 20,000 |
| Opening Stock | 3,00,000 | Wages | 45,000 |
| Sales | 11,25,000 | Rent & Taxes | 23,000 |
| Sales Return | 35,000 | Printing & Stationery | 55,000 |
| Legal Fees | 23,000 | Advertisement | 55,000 |
Solution:
Share Market Company
Trading and Profit & Loss Account
For the year ended Ashadh
| Dr. Particulars | Rs. | Cr. Particulars | Rs. |
|---|---|---|---|
| Opening Stock | 3,00,000 | Sales: 11,25,000 Less: Return: (35,000) | 10,90,000 |
| Purchases: 5,00,000 Less: Return: (25,000) | 4,75,000 | ||
| Wages | 45,000 | ||
| Carriage Inward | 20,000 | ||
| Gross Profit c/d | 2,50,000 | ||
| Total | 10,90,000 | Total | 10,90,000 |
| Salaries | 2,18,000 | Gross Profit b/d | 2,50,000 |
| Rent & Taxes | 23,000 | Net Loss (deducted from Capital) | 1,24,000 |
| Printing & Stationery | 55,000 | ||
| Legal Fees | 23,000 | ||
| Advertisement | 55,000 | ||
| Total | 3,74,000 | Total | 3,74,000 |
Qns. II: Janakpur Textile Factory — Trading and P&L Account 8 Marks
Question:
Based on the following transactions, prepare the Trading and Profit & Loss Account of Janakpur Textile Factory for the period ended Chaitra of F/Y 2077/78:
| Opening Stock: 80,50,000 | Purchases: 2,30,00,000 | Sales: 5,00,00,000 |
| Wages: 10,00,000 | Postage: 5,000 | Printing & Stationery: 5,000 |
| Bad Debt: 27,000 | Audit Fee: 27,000 | Salary: 7,500 |
| Discount Received: 23,000 | Depreciation: 56,000 | Interest Paid: 1,50,000 |
| Interest Received: 3,000 | Travelling Expenses: 15,000 | Other Expenses: 75,000 |
| Advertisement: 75,000 | Sundry Receipts: 31,500 | Repairs & Maintenance: 7,000 |
| Selling Commission: 13,000 |
- Adjustments:
- 1. Closing Stock: Rs. 25,00,000
- 2. Outstanding Salary: Rs. 10,000
- 3. Prepaid Wages: Rs. 2,000
Solution:
Janakpur Textile Factory
Trading and Profit & Loss Account
For F/Y 2077/78 ended Chaitra
| Dr. Particulars | Rs. | Cr. Particulars | Rs. |
|---|---|---|---|
| Opening Stock | 80,50,000 | Sales | 5,00,00,000 |
| Purchases | 2,30,00,000 | Closing Stock | 25,00,000 |
| Wages: 10,00,000 Less: Prepaid: (2,000) | 9,98,000 | ||
| Gross Profit c/d | 2,04,52,000 | ||
| Total | 5,25,00,000 | Total | 5,25,00,000 |
| Salary: 7,500 Add: Outstanding: 10,000 | 17,500 | Gross Profit b/d | 2,04,52,000 |
| Postage | 5,000 | Discount Received | 23,000 |
| Printing & Stationery | 5,000 | Interest Received | 3,000 |
| Bad Debt | 27,000 | Sundry Receipts | 31,500 |
| Audit Fee | 27,000 | ||
| Depreciation | 56,000 | ||
| Interest Paid | 1,50,000 | ||
| Travelling Expenses | 15,000 | ||
| Other Expenses | 75,000 | ||
| Advertisement | 75,000 | ||
| Repairs & Maintenance | 7,000 | ||
| Selling Commission | 13,000 | ||
| Net Profit (added to Capital) | 2,00,37,000 | ||
| Total | 2,05,09,500 | Total | 2,05,09,500 |
Qns. III: Kavita & Company Pvt. Ltd. — Trading and P&L Account 8 Marks
Question:
Prepare the Trading and Profit & Loss Account of Kavita & Company Pvt. Ltd. for F/Y 2078/79 based on the following transactions:
| Purchases: 1,60,000 | Wages: 21,000 | Sales: 2,40,000 |
| Salaries: 30,000 | Opening Stock: 40,000 | Rent & Taxes: 3,000 |
| Insurance: 5,000 | Bad Debt: 3,000 | Trade Expenses: 35,000 |
| Depreciation: 6,000 | Closing Stock: 56,000 | Interest Received: 15,000 |
| Postage: 5,000 | Commission Received: 3,000 | Selling Commission: 7,000 |
- Adjustments:
- 1. Accrued Interest: Rs. 1,000
- 2. Advance Commission Received: Rs. 500
Solution:
Kavita & Company Pvt. Ltd.
Trading and Profit & Loss Account
For F/Y 2078/79
| Dr. Particulars | Rs. | Cr. Particulars | Rs. |
|---|---|---|---|
| Opening Stock | 40,000 | Sales | 2,40,000 |
| Purchases | 1,60,000 | Closing Stock | 56,000 |
| Wages | 21,000 | ||
| Gross Profit c/d | 75,000 | ||
| Total | 2,96,000 | Total | 2,96,000 |
| Salaries | 30,000 | Gross Profit b/d | 75,000 |
| Rent & Taxes | 3,000 | Interest Received: 15,000 Add: Accrued: 1,000 | 16,000 |
| Insurance | 5,000 | Commission Received: 3,000 Less: Advance: (500) | 2,500 |
| Bad Debt | 3,000 | Net Loss (deducted from Capital) | 500 |
| Trade Expenses | 35,000 | ||
| Depreciation | 6,000 | ||
| Postage | 5,000 | ||
| Selling Commission | 7,000 | ||
| Total | 94,000 | Total | 94,000 |
Qns. IV: Anam & Company — Trading and P&L Account 8 Marks
Question:
From the given information, prepare the Trading and Profit & Loss Account of Anam & Company for the year ended 31 December 2022:
| Purchases: 90,125 | Factory Rent: 27,000 | Trade Expenses: 12,000 |
| Printing & Stationery: 5,000 | Sales: 1,25,000 | Sales Return: 9,500 |
| Rent: 15,000 | Opening Stock: 10,000 | Discount Received: 2,370 |
| Carriage Outward: 9,000 | Coal & Power: 16,875 | Interest Received: 15,000 |
| Dividend Received: 15,000 | Closing Stock: 75,500 |
- Adjustments:
- 1. Advance Interest Received: Rs. 1,000
- 2. Outstanding Rent: Rs. 2,000
Solution:
Anam & Company
Trading and Profit & Loss Account
For the year ended 31 December 2022
| Dr. Particulars | Rs. | Cr. Particulars | Rs. |
|---|---|---|---|
| Opening Stock | 10,000 | Sales: 1,25,000 Less: Return: (9,500) | 1,15,500 |
| Purchases | 90,125 | Closing Stock | 75,500 |
| Factory Rent | 27,000 | ||
| Coal & Power | 16,875 | ||
| Gross Profit c/d | 47,000 | ||
| Total | 1,91,000 | Total | 1,91,000 |
| Trade Expenses | 12,000 | Gross Profit b/d | 47,000 |
| Printing & Stationery | 5,000 | Discount Received | 2,370 |
| Rent: 15,000 Add: Outstanding: 2,000 | 17,000 | Interest Received: 15,000 Less: Advance: (1,000) | 14,000 |
| Carriage Outward | 9,000 | Dividend Received | 15,000 |
| Net Profit (added to Capital) | 35,370 | ||
| Total | 78,370 | Total | 78,370 |
Qns. V: Shivaparvati Pvt. Ltd. — Trading and P&L Account 8 Marks
Question:
Prepare the Trading and Profit & Loss Account of Shivaparvati Pvt. Ltd. as at the end of Chaitra 2079:
| Opening Stock: 13,000 | Purchases: 82,000 | Bad Debt: 14,000 |
| Factory Power: 18,000 | Dividend Received: 20,000 | Productive Expenses: 27,000 |
| Sales: 1,50,000 | Telephone & Telegram: 6,000 | Sales Return: 10,000 |
| Coal: 15,000 | Entertainment Expenses: 11,000 | Closing Stock: 55,000 |
| Bank Charges: 5,000 | Interest Received: 8,000 | Carriage & Wages: 12,000 |
| Bonus Received: 3,000 |
Solution:
Shivaparvati Pvt. Ltd.
Trading and Profit & Loss Account
For the year ended Chaitra 2079
| Dr. Particulars | Rs. | Cr. Particulars | Rs. |
|---|---|---|---|
| Opening Stock | 13,000 | Sales: 1,50,000 Less: Return: (10,000) | 1,40,000 |
| Purchases | 82,000 | Closing Stock | 55,000 |
| Factory Power | 18,000 | ||
| Productive Expenses | 27,000 | ||
| Coal | 15,000 | ||
| Carriage & Wages | 12,000 | ||
| Gross Profit c/d | 28,000 | ||
| Total | 1,95,000 | Total | 1,95,000 |
| Bad Debt | 14,000 | Gross Profit b/d | 28,000 |
| Telephone & Telegram | 6,000 | Dividend Received | 20,000 |
| Entertainment Expenses | 11,000 | Interest Received | 8,000 |
| Bank Charges | 5,000 | Bonus Received | 3,000 |
| Net Profit (added to Capital) | 23,000 | ||
| Total | 59,000 | Total | 59,000 |
Qns. VI: Suraj Enterprises — Trading and P&L Account 8 Marks
Question:
Based on the given information, prepare the Trading and Profit & Loss Account of Suraj Enterprises for F/Y 2078 ended Ashadh:
| Opening Stock: 25,000 | Purchases: 50,000 | Salaries: 54,000 |
| Sales: 40,000 | Coal & Water: 4,500 | Purchase Return: 9,500 |
| Audit Fees: 11,000 | Legal Fees: 4,000 | Sales Return: 5,000 |
| Closing Stock: 65,000 | Rent Received: 35,500 | Carriage Inward: 20,000 |
| Carriage Outward: 12,000 | Interest on Dev. Bond: 28,000 | Income from Investment: 27,000 |
| Factory Expenses: 21,000 | Wages: 15,000 | Commission & Discount Received: 3,000 |
Solution:
Suraj Enterprises
Trading and Profit & Loss Account
For F/Y 2078 ended Ashadh
| Dr. Particulars | Rs. | Cr. Particulars | Rs. |
|---|---|---|---|
| Opening Stock | 25,000 | Sales: 40,000 Less: Return: (5,000) | 35,000 |
| Purchases: 50,000 Less: Return: (9,500) | 40,500 | Closing Stock | 65,000 |
| Coal & Water | 4,500 | Gross Loss c/d | 26,000 |
| Carriage Inward | 20,000 | ||
| Factory Expenses | 21,000 | ||
| Wages | 15,000 | ||
| Total | 1,26,000 | Total | 1,26,000 |
| Gross Loss b/d | 26,000 | Rent Received | 35,500 |
| Salaries | 54,000 | Interest on Development Bond | 28,000 |
| Audit Fees | 11,000 | Income from Investment | 27,000 |
| Legal Fees | 4,000 | Commission & Discount Received | 3,000 |
| Carriage Outward | 12,000 | Net Loss (deducted from Capital) | 13,500 |
| Total | 1,07,000 | Total | 1,07,000 |
4. CDC Numerical Solutions
(B) Prepare Balance Sheet [8 Marks]
Qns. I: Laxmi Gundpak Bhandar — Balance Sheet 8 Marks
Question:
From the given information, prepare the Balance Sheet of Laxmi Gundpak Bhandar as at Ashadh 32, 2077:
| Net Loss: 9,000 | Bank Loan: 11,000 | Bank Overdraft: 15,000 |
| Debtors: 13,000 | Creditors: 7,000 | Capital: 1,80,000 |
| Furniture: 50,000 | Building: 90,000 | Bills Payable: 59,000 |
| Machinery: 1,10,000 | Reserve Fund: 28,000 | Bank Balance: 28,000 |
Solution:
Laxmi Gundpak Bhandar
Balance Sheet
As at Ashadh 32, 2077
| Capital & Liabilities | Rs. | Assets | Rs. |
|---|---|---|---|
| Capital: 1,80,000 Less: Net Loss: (9,000) | 1,71,000 | Machinery | 1,10,000 |
| Reserve Fund | 28,000 | Building | 90,000 |
| Bank Loan | 11,000 | Furniture | 50,000 |
| Bank Overdraft | 15,000 | Debtors | 13,000 |
| Creditors | 7,000 | Bank Balance | 28,000 |
| Bills Payable | 59,000 | ||
| Total | 2,91,000 | Total | 2,91,000 |
Qns. II: Jai Real Estate Company — Balance Sheet 8 Marks
Question:
From the following information, prepare the Balance Sheet of Jai Real Estate Company as at 31 December 2022:
| Capital: 5,00,000 | Motor Car: 7,25,000 | Business Premises: 3,10,000 |
| Creditors: 95,000 | Office Furniture: 50,000 | Bank Loan: 1,30,000 |
| Mortgage Loan: 2,00,000 | Closing Stock: 23,000 | Prepaid Expenses: 40,000 |
| Reserve Fund: 89,000 | Land: 70,000 | Advance Income: 1,75,000 |
| Net Profit: 77,000 | Outstanding Expenses: 7,000 | Cash in Hand: 55,000 |
Solution:
Jai Real Estate Company
Balance Sheet
As at 31 December 2022
| Capital & Liabilities | Rs. | Assets | Rs. |
|---|---|---|---|
| Capital: 5,00,000 Add: Net Profit: 77,000 | 5,77,000 | Premises | 3,10,000 |
| Reserve Fund | 89,000 | Land | 70,000 |
| Mortgage Loan | 2,00,000 | Motor Car | 7,25,000 |
| Bank Loan | 1,30,000 | Office Furniture | 50,000 |
| Creditors | 95,000 | Closing Stock | 23,000 |
| Advance Income | 1,75,000 | Prepaid Expenses | 40,000 |
| Outstanding Expenses | 7,000 | Cash in Hand | 55,000 |
| Total | 12,73,000 | Total | 12,73,000 |
Qns. III: Radha & Company — Balance Sheet 8 Marks
Question:
From the following information, prepare the Balance Sheet of Radha & Company at the end of F/Y 2078/79.
| Capital: 14,41,500 | Machinery: 80,400 | Bank Balance: 1,29,395 |
| Net Profit: 65,800 | Loan: 2,45,405 | Creditors: 1,97,670 |
| Building: 17,50,200 | Debtors: 1,79,780 | Cash Balance: 41,450 |
| Closing Stock: 6,87,900 | Drawings: 34,100 | Reserve Fund: 2,38,900 |
- Adjustment:
- 1. Depreciation on Machinery: Rs. 4,000
Solution:
Radha & Company
Balance Sheet
As at end of F/Y 2078/79
| Capital & Liabilities | Rs. | Assets | Rs. |
|---|---|---|---|
| Capital: 14,41,500 Less: Drawings: (34,100) Add: Net Profit: 65,800 | 14,73,200 | Building | 17,50,200 |
| Reserve Fund | 2,38,900 | Machinery: 80,400 Less: Depreciation: (4,000) | 76,400 |
| Loan | 2,45,405 | Closing Stock | 6,87,900 |
| Creditors | 1,97,670 | Debtors | 1,79,780 |
| Bank Balance | 1,29,395 | ||
| Cash Balance | 41,450 | ||
| Total | 21,55,175 | Total | 28,65,125 |
(Note: The totals of liabilities and assets do not match based on the original Trial Balance data provided in the question. This is a printing error in the curriculum; however, all items have been entered in their correct positions in accordance with accounting principles.)
5. CDC Numerical Solutions
(C) Prepare Trading & P&L Account and Balance Sheet [8 Marks]
Qns. III: Ram Trader — Final Account 8 Marks
Question:
Based on the following Trial Balance, prepare the Trading and P&L Account and Balance Sheet of Ram Trader for F/Y 2075/76.
| Debit Balances | Rs. | Credit Balances | Rs. |
|---|---|---|---|
| Opening Stock | 10,000 | Sales | 1,60,000 |
| Purchases | 1,00,000 | Loan | 25,000 |
| Debtors | 30,000 | Capital | 70,000 |
| Interest on Loan | 5,000 | Creditors | 7,500 |
| Machinery | 80,000 | Bills Payable | 3,000 |
| Salary | 25,000 | Commission | 1,500 |
| Cash Balance | 10,500 | ||
| Bad Debt | 1,500 | ||
| Carriage on Purchase | 3,000 | ||
| Insurance | 2,000 | ||
| Total | 2,67,000 | Total | 2,67,000 |
- Adjustments:
- 1. Closing Stock: Rs. 40,000
- 2. Depreciation on Machinery: Rs. 8,000
- 3. Advance Commission Received: Rs. 500
Solution:
Ram Trader
Trading and Profit & Loss Account
For F/Y 2075/76
| Dr. Particulars | Rs. | Cr. Particulars | Rs. |
|---|---|---|---|
| Opening Stock | 10,000 | Sales | 1,60,000 |
| Purchases | 1,00,000 | Closing Stock | 40,000 |
| Carriage on Purchase | 3,000 | ||
| Gross Profit c/d | 87,000 | ||
| Total | 2,00,000 | Total | 2,00,000 |
| Interest on Loan | 5,000 | Gross Profit b/d | 87,000 |
| Salary | 25,000 | Commission: 1,500 Less: Advance: (500) | 1,000 |
| Bad Debt | 1,500 | ||
| Insurance | 2,000 | ||
| Depreciation on Machinery | 8,000 | ||
| Net Profit (added to Capital) | 46,500 | ||
| Total | 88,000 | Total | 88,000 |
Ram Trader
Balance Sheet
As at end of Ashadh 2076
| Capital & Liabilities | Rs. | Assets | Rs. |
|---|---|---|---|
| Capital: 70,000 Add: Net Profit: 46,500 | 1,16,500 | Machinery: 80,000 Less: Depreciation: (8,000) | 72,000 |
| Loan | 25,000 | Debtors | 30,000 |
| Creditors | 7,500 | Closing Stock | 40,000 |
| Bills Payable | 3,000 | Cash in Hand | 10,500 |
| Advance Commission | 500 | ||
| Total | 1,52,500 | Total | 1,52,500 |
Qns. IV: Baral Trader, Kathmandu — Final Account 8 Marks
Question:
Based on the following Trial Balance, prepare the Trading and P&L Account and Balance Sheet of Baral Trader, Kathmandu for F/Y 2076/77.
| Debit Balances | Rs. | Credit Balances | Rs. |
|---|---|---|---|
| Opening Stock | 70,000 | Capital | 1,00,000 |
| Purchases | 2,30,000 | Sales | 3,87,500 |
| Debtors | 17,000 | Loan | 50,000 |
| Prepaid Expenses | 2,00,000 | Creditors | 17,500 |
| Machinery | 55,000 | Discount Received | 4,000 |
| Wages | 35,000 | Interest on Investment | 2,500 |
| Bank Balance | 20,500 | ||
| Furniture | 30,000 | ||
| Salaries | 50,000 | ||
| Rent | 12,000 | ||
| Investment | 40,000 | ||
| Total | 5,61,500 | Total | 5,61,500 |
- Adjustments:
- 1. Closing Stock: Rs. 65,000
- 2. Outstanding Rent: Rs. 5,000
- 3. Accrued Interest on Investment: Rs. 1,500
Solution:
Baral Trader, Kathmandu
Trading and Profit & Loss Account
For F/Y 2076/77
| Dr. Particulars | Rs. | Cr. Particulars | Rs. |
|---|---|---|---|
| Opening Stock | 70,000 | Sales | 3,87,500 |
| Purchases | 2,30,000 | Closing Stock | 65,000 |
| Wages | 35,000 | ||
| Gross Profit c/d | 1,17,500 | ||
| Total | 4,52,500 | Total | 4,52,500 |
| Salaries | 50,000 | Gross Profit b/d | 1,17,500 |
| Rent: 12,000 Add: Outstanding: 5,000 | 17,000 | Discount Received | 4,000 |
| Interest on Investment: 2,500 Add: Accrued: 1,500 | 4,000 | ||
| Net Profit (added to Capital) | 58,500 | ||
| Total | 1,25,500 | Total | 1,25,500 |
Baral Trader, Kathmandu
Balance Sheet
As at end of Ashadh 2077
| Capital & Liabilities | Rs. | Assets | Rs. |
|---|---|---|---|
| Capital: 1,00,000 Add: Net Profit: 58,500 | 1,58,500 | Machinery | 55,000 |
| Loan | 50,000 | Furniture | 30,000 |
| Creditors | 17,500 | Investment | 40,000 |
| Outstanding Rent | 5,000 | Closing Stock | 65,000 |
| Debtors | 17,000 | ||
| Accrued Interest | 1,500 | ||
| Prepaid Expenses | 2,000 | ||
| Bank Balance | 20,500 | ||
| Total | 2,31,000 | Total | 2,31,000 |
Qns. V: Sita Dairy, Bharatpur — Final Account 8 Marks
Question:
Based on the following Trial Balance, prepare the Trading and P&L Account and Balance Sheet of Sita Dairy, Bharatpur for F/Y 2076/77.
| Debit Balances | Rs. | Credit Balances | Rs. |
|---|---|---|---|
| Building | 3,50,000 | Capital | 3,50,000 |
| Machinery | 2,30,000 | Sales | 10,21,500 |
| Purchases | 6,00,000 | Bank Loan | 1,50,000 |
| Sales Return | 25,000 | Bills Payable | 75,000 |
| Debtors | 1,05,000 | Purchase Return | 40,000 |
| Carriage on Purchases | 15,000 | Rent Received | 34,000 |
| Cash & Bank Balance | 80,500 | ||
| Office Expenses | 15,000 | ||
| Salary | 1,50,000 | ||
| Closing Stock (in TB) | 90,000 | ||
| Discount Allowed | 10,000 | ||
| Total | 16,70,500 | Total | 16,70,500 |
- Adjustments:
- 1. Outstanding Salary: Rs. 25,000
- 2. Depreciation on Machinery & Building: @ 10%
- 3. Advance Rent Received: Rs. 5,000
Solution:
Sita Dairy, Bharatpur
Trading and Profit & Loss Account
For F/Y 2076/77
| Dr. Particulars | Rs. | Cr. Particulars | Rs. |
|---|---|---|---|
| Purchases: 6,00,000 Less: Return: (40,000) | 5,60,000 | Sales: 10,21,500 Less: Return: (25,000) | 9,96,500 |
| Carriage on Purchases | 15,000 | ||
| Gross Profit c/d | 4,21,500 | ||
| Total | 9,96,500 | Total | 9,96,500 |
| Salary: 1,50,000 Add: Outstanding: 25,000 | 1,75,000 | Gross Profit b/d | 4,21,500 |
| Office Expenses | 15,000 | Rent Received: 34,000 Less: Advance: (5,000) | 29,000 |
| Discount Allowed | 10,000 | ||
| Dep. on Building @ 10% | 35,000 | ||
| Dep. on Machinery @ 10% | 23,000 | ||
| Net Profit (added to Capital) | 1,92,500 | ||
| Total | 4,50,500 | Total | 4,50,500 |
Sita Dairy, Bharatpur
Balance Sheet
As at end of Ashadh 2077
| Capital & Liabilities | Rs. | Assets | Rs. |
|---|---|---|---|
| Capital: 3,50,000 Add: Net Profit: 1,92,500 | 5,42,500 | Building: 3,50,000 Less: Dep.: (35,000) | 3,15,000 |
| Bank Loan | 1,50,000 | Machinery: 2,30,000 Less: Dep.: (23,000) | 2,07,000 |
| Bills Payable | 75,000 | Debtors | 1,05,000 |
| Outstanding Salary | 25,000 | Closing Stock (from TB) | 90,000 |
| Advance Rent Received | 5,000 | Cash & Bank Balance | 80,500 |
| Total | 7,97,500 | Total | 7,97,500 |
6. Additional Important Questions
1. Write the names of any two Current Assets.
Answer: Current Assets include (1) Closing Stock and (2) Debtors.
2. Write the names of any two Current Liabilities.
Answer: Current Liabilities include (1) Bank Overdraft and (2) Creditors.
3. How is Net Profit determined?
Answer: Net Profit is found by adding indirect incomes to the Gross Profit and then deducting all indirect expenses.
4. Which account is prepared before the Balance Sheet?
Answer: The Profit & Loss Account is prepared before the Balance Sheet.
5. When is a Final Account prepared?
Answer: A Final Account is prepared at the end of every fiscal year.
6. Write any two examples of Indirect Expenses.
Answer: Salary and Advertisement are examples of Indirect Expenses.
7. In which part of the Balance Sheet is Bank Overdraft entered?
Answer: Bank Overdraft is entered on the Capital and Liabilities side of the Balance Sheet, under the heading of Current Liabilities.
8. How is Net Profit adjusted in the Balance Sheet?
Answer: In the Balance Sheet, Net Profit is added to the Capital heading on the Capital and Liabilities side.
9. How are Drawings adjusted in the Balance Sheet?
Answer: In the Balance Sheet, Drawings are deducted from the Capital amount.
10. Write the names of any two production (direct) expenses.
Answer: Wages and Carriage Inward fall under production (direct) expenses.
11. What do Intangible Assets refer to?
Answer: Assets that have no physical form but have economic value are called Intangible Assets, such as Goodwill and Copyright.
12. What is Cash Balance?
Answer: The liquid cash amount available in the business’s treasury (cash box) is called Cash Balance.
13. What is an Outstanding Expense?
Answer: An amount for which the business has already received the service or benefit but for which payment is still due is called an Outstanding Expense (e.g., outstanding salary).
14. Write any two items that are included in Direct Expenses.
Answer: Factory Expenses and Wages fall under Direct Expenses.
15. What is Liability?
Answer: The total debts and amounts payable that a business must pay to external individuals or institutions in the future are called Liabilities.
16. What is Gross Profit?
Answer: The amount remaining after deducting the Cost of Goods Sold from the net sales amount is called Gross Profit.
17. What type of asset is Goodwill?
Answer: Goodwill is an Intangible Asset linked to the reputation of the business.
18. How is Net Profit or Net Loss adjusted in the Balance Sheet?
Answer: Net Profit is added to Capital, whereas Net Loss is deducted from Capital.
19. How is outstanding salary expense at the year-end recorded in the Final Account?
Answer: It is added to the salary expense on the Debit side of the Profit & Loss Account, and shown separately as a Current Liability on the Liabilities side of the Balance Sheet.
7. Special Practice Problems (Board Exam Solutions)
Q.1: Sedrina Traders — Final Account 8 Marks
Question 1:
The following are the ledger balances of Sedrina Traders as on 31st Chaitra 2080:
| Debit Balances | Rs. | Credit Balances | Rs. |
|---|---|---|---|
| Opening Stock | 64,000 | Sales | 4,60,000 |
| Purchases | 2,90,000 | Capital | 80,000 |
| Freight | 10,000 | Creditors | 38,000 |
| Prepaid Salaries | 60,000 | Purchase Return | 5,000 |
| Printing & Stationery | 2,000 | Commission Received | 2,000 |
| Wages | 30,000 | ||
| Sales Return | 6,000 | ||
| Debtors | 44,000 | ||
| Cash in Hand | 22,000 | ||
| Building | 40,000 | ||
| Office Rent | 8,000 | ||
| Selling Expenses | 9,000 | ||
| Total | 5,85,000 | Total | 5,85,000 |
- Additional Information:
- i. Outstanding Office Rent: Rs. 2,000
- ii. Prepaid Salaries Expired: Rs. 56,000
- iii. Closing Stock: Rs. 70,000
Solution:
Sedrina Traders
Trading Account
For the year ended 31st Chaitra 2080
| Dr. Particulars | Rs. | Cr. Particulars | Rs. |
|---|---|---|---|
| Opening Stock | 64,000 | Sales: 4,60,000 Less: Return: (6,000) | 4,54,000 |
| Purchases: 2,90,000 Less: Return: (5,000) | 2,85,000 | Closing Stock | 70,000 |
| Wages | 30,000 | ||
| Freight | 10,000 | ||
| Gross Profit c/d | 1,35,000 | ||
| Total | 5,24,000 | Total | 5,24,000 |
Sedrina Traders
Profit & Loss Account
For the year ended 31st Chaitra 2080
| Dr. Particulars | Rs. | Cr. Particulars | Rs. |
|---|---|---|---|
| Salaries (Prepaid expired) | 56,000 | Gross Profit b/d | 1,35,000 |
| Printing & Stationery | 2,000 | Commission Received | 2,000 |
| Office Rent: 8,000 Add: Outstanding: 2,000 | 10,000 | ||
| Selling Expenses | 9,000 | ||
| Net Profit (added to Capital) | 60,000 | ||
| Total | 1,37,000 | Total | 1,37,000 |
Sedrina Traders
Balance Sheet
As at 31st Chaitra 2080
| Capital & Liabilities | Rs. | Assets | Rs. |
|---|---|---|---|
| Capital: 80,000 Add: Net Profit: 60,000 | 1,40,000 | Building | 40,000 |
| Outstanding Office Rent | 2,000 | Prepaid Salaries remaining (60k − 56k) | 4,000 |
| Creditors | 38,000 | Debtors | 44,000 |
| Closing Stock | 70,000 | ||
| Cash in Hand | 22,000 | ||
| Total | 1,80,000 | Total | 1,80,000 |
Q.2: A Trader — Final Account 8 Marks
Question 2:
The trial balance of a trader for last year is as follows:
| Debit | Rs. | Credit | Rs. |
|---|---|---|---|
| Machinery | 80,000 | Capital | 1,80,000 |
| Debtors | 80,000 | Sales | 4,55,000 |
| Furniture | 40,000 | Creditors | 64,000 |
| Cash | 1,30,000 | Purchase Return | 8,000 |
| Opening Stock | 40,000 | Commission Received | 8,000 |
| Purchase | 3,20,000 | Loan | 48,000 |
| Wages | 16,000 | ||
| Salary | 24,000 | ||
| Sales Return | 3,000 | ||
| Carriage | 5,000 | ||
| Commission Paid | 1,000 | ||
| Rent | 24,000 | ||
| Total | 7,63,000 | Total | 7,63,000 |
- Additional Information:
- i. 5% Depreciation on Furniture & Machinery
- ii. Outstanding Rent: Rs. 5,000
- iii. Closing Stock: Rs. 1,20,000
Solution:
Trading Account
For the year ended
| Dr. Particulars | Rs. | Cr. Particulars | Rs. |
|---|---|---|---|
| Opening Stock | 40,000 | Sales: 4,55,000 Less: Return: (3,000) | 4,52,000 |
| Purchase: 3,20,000 Less: Return: (8,000) | 3,12,000 | Closing Stock | 1,20,000 |
| Carriage | 5,000 | ||
| Wages | 16,000 | ||
| Gross Profit c/d | 1,99,000 | ||
| Total | 5,72,000 | Total | 5,72,000 |
Profit & Loss Account
For the year ended
| Dr. Particulars | Rs. | Cr. Particulars | Rs. |
|---|---|---|---|
| Dep. on Furniture (5%) | 2,000 | Gross Profit b/d | 1,99,000 |
| Dep. on Machinery (5%) | 4,000 | Commission Received | 8,000 |
| Salary | 24,000 | ||
| Rent: 24,000 Add: Outstanding: 5,000 | 29,000 | ||
| Commission Paid | 1,000 | ||
| Net Profit (added to Capital) | 1,47,000 | ||
| Total | 2,07,000 | Total | 2,07,000 |
Balance Sheet
As at end of year
| Capital & Liabilities | Rs. | Assets | Rs. |
|---|---|---|---|
| Capital: 1,80,000 Add: Net Profit: 1,47,000 | 3,27,000 | Machinery: 80,000 Less: Dep. (5%): (4,000) | 76,000 |
| Creditors | 64,000 | Furniture: 40,000 Less: Dep. (5%): (2,000) | 38,000 |
| Outstanding Rent | 5,000 | Debtors | 80,000 |
| Loan | 48,000 | Cash | 1,30,000 |
| Closing Stock | 1,20,000 | ||
| Total | 4,44,000 | Total | 4,44,000 |
Q.3: B Traders — Final Account 8 Marks
Question 3:
The following is the Trial Balance of B Traders as on 31st Chaitra 2080:
| Debit | Rs. | Credit | Rs. |
|---|---|---|---|
| Opening Stock | 1,20,000 | Bills Payable | 10,000 |
| Purchase | 2,15,000 | Capital | 2,00,000 |
| Prepaid Salary | 1,22,000 | Creditors | 40,000 |
| Cash & Bank | 31,000 | Purchase Return | 10,000 |
| Carriage Inwards | 10,000 | Rent Received | 10,000 |
| Sales Return | 10,000 | Sales | 4,10,000 |
| Debtors | 50,000 | 10% Bank Loan | 70,000 |
| Discount | 3,000 | ||
| Drawings | 4,000 | ||
| Furniture | 1,00,000 | ||
| General Expenses | 15,000 | ||
| Goodwill | 20,000 | ||
| Wages | 50,000 | ||
| Total | 7,50,000 | Total | 7,50,000 |
- Additional Information:
- i. Closing Stock: Rs. 50,000
- ii. Outstanding Wages: Rs. 30,000
- iii. Prepaid Salary Expired: Rs. 1,10,000
- iv. Depreciation on Furniture: @ 10%
Solution:
B Traders
Trading Account
For the year ended 31st Chaitra 2080
| Dr. Particulars | Rs. | Cr. Particulars | Rs. |
|---|---|---|---|
| Opening Stock | 1,20,000 | Sales: 4,10,000 Less: Return: (10,000) | 4,00,000 |
| Purchases: 2,15,000 Less: Return: (10,000) | 2,05,000 | Closing Stock | 50,000 |
| Carriage Inwards | 10,000 | ||
| Wages: 50,000 Add: Outstanding: 30,000 | 80,000 | ||
| Gross Profit c/d | 35,000 | ||
| Total | 4,50,000 | Total | 4,50,000 |
B Traders
Profit & Loss Account
For the year ended 31st Chaitra 2080
| Dr. Particulars | Rs. | Cr. Particulars | Rs. |
|---|---|---|---|
| Salaries (Prepaid expired) | 1,10,000 | Gross Profit b/d | 35,000 |
| Discount | 3,000 | Rent Received | 10,000 |
| General Expenses | 15,000 | Net Loss (deducted from Capital) | 1,00,000 |
| Dep. on Furniture (10%) | 10,000 | ||
| Interest on Bank Loan (Hidden Adj: 70,000 × 10%) | 7,000 | ||
| Total | 1,45,000 | Total | 1,45,000 |
B Traders
Balance Sheet
As at 31st Chaitra 2080
| Capital & Liabilities | Rs. | Assets | Rs. |
|---|---|---|---|
| Capital: 2,00,000 Less: Net Loss: (1,00,000) Less: Drawings: (4,000) | 96,000 | Furniture: 1,00,000 Less: Dep.: (10,000) | 90,000 |
| Creditors | 40,000 | Goodwill | 20,000 |
| Outstanding Int. on Loan | 7,000 | Prepaid Salary remaining (1,22k − 1,10k) | 12,000 |
| Outstanding Wages | 30,000 | Debtors | 50,000 |
| Bills Payable | 10,000 | Cash & Bank Balance | 31,000 |
| 10% Bank Loan | 70,000 | Closing Stock | 50,000 |
| Total | 2,53,000 | Total | 2,53,000 |
(Working Note: Outstanding Interest on Bank Loan [Hidden Adjustment] = Rs. 70,000 × 10/100 = Rs. 7,000)
📚 Also Read: Class 10 SEE Notes
Compulsory Subjects
English
Nepali
Social Studies
C. Mathematics
ScienceOptional Subjects
Computer
Account
Economics
Optional Math