{"id":231044,"date":"2026-10-27T17:09:47","date_gmt":"2026-10-27T11:39:47","guid":{"rendered":"https:\/\/www.oliveboard.in\/blog\/?p=231044"},"modified":"2026-10-27T17:09:47","modified_gmt":"2026-10-27T11:39:47","slug":"preparation-of-final-accounts","status":"publish","type":"post","link":"https:\/\/www.oliveboard.in\/blog\/preparation-of-final-accounts\/","title":{"rendered":"UPSC EPFO Preparation of Final Accounts Practice Quiz &amp; PDF"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_77 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of content<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/www.oliveboard.in\/blog\/preparation-of-final-accounts\/#What_are_Final_Accounts\" >What are Final Accounts?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/www.oliveboard.in\/blog\/preparation-of-final-accounts\/#Download_UPSC_EPFO_Preparation_of_Final_Accounts_Quiz_PDF\" >Download UPSC EPFO Preparation of Final Accounts Quiz PDF<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/www.oliveboard.in\/blog\/preparation-of-final-accounts\/#Attempt_UPSC_EPFO_Preparation_of_Final_Accounts_Quiz\" >Attempt UPSC EPFO Preparation of Final Accounts Quiz<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/www.oliveboard.in\/blog\/preparation-of-final-accounts\/#Sign_Up\" >Sign Up<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/www.oliveboard.in\/blog\/preparation-of-final-accounts\/#Login\" >Login<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/www.oliveboard.in\/blog\/preparation-of-final-accounts\/#Forgot_Password\" >Forgot Password<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/www.oliveboard.in\/blog\/preparation-of-final-accounts\/#i\" >&nbsp;<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/www.oliveboard.in\/blog\/preparation-of-final-accounts\/#What_topics_are_covered_in_the_Final_Accounts_practice_quiz\" >What topics are covered in the Final Accounts practice quiz?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/www.oliveboard.in\/blog\/preparation-of-final-accounts\/#What_are_the_objectives_of_preparing_Final_Accounts\" >What are the objectives of preparing Final Accounts?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/www.oliveboard.in\/blog\/preparation-of-final-accounts\/#What_are_the_main_components_of_Final_Accounts\" >What are the main components of Final Accounts?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/www.oliveboard.in\/blog\/preparation-of-final-accounts\/#What_is_a_Trading_Account_and_what_is_its_format\" >What is a Trading Account, and what is its format?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/www.oliveboard.in\/blog\/preparation-of-final-accounts\/#What_is_a_Profit_and_Loss_Account_and_what_is_its_format\" >What is a Profit and Loss Account, and what is its format?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-13\" href=\"https:\/\/www.oliveboard.in\/blog\/preparation-of-final-accounts\/#What_is_a_Balance_Sheet_and_what_is_its_format\" >What is a Balance Sheet, and what is its format?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-14\" href=\"https:\/\/www.oliveboard.in\/blog\/preparation-of-final-accounts\/#What_adjustments_are_made_while_preparing_Final_Accounts\" >What adjustments are made while preparing Final Accounts?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-15\" href=\"https:\/\/www.oliveboard.in\/blog\/preparation-of-final-accounts\/#Why_are_Final_Accounts_important_for_a_business\" >Why are Final Accounts important for a business?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-16\" href=\"https:\/\/www.oliveboard.in\/blog\/preparation-of-final-accounts\/#What_is_the_difference_between_a_Trial_Balance_and_Final_Accounts\" >What is the difference between a Trial Balance and Final Accounts?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-17\" href=\"https:\/\/www.oliveboard.in\/blog\/preparation-of-final-accounts\/#FAQs\" >FAQs<\/a><\/li><\/ul><\/nav><\/div>\n\n<p>Final Accounts is an important accounting topic for candidates preparing for the UPSC EPFO exam. It explains how a business calculates its gross profit or loss, determines its net profit or loss, and presents its financial position at the end of an accounting year. Understanding Final Accounts helps candidates learn the basics of the Trading Account, Profit and Loss Account, Balance Sheet, and year-end adjustments. This blog covers the meaning, objectives, components, formats, and importance of Final Accounts to support your UPSC EPFO preparation.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-what-are-final-accounts\"><span class=\"ez-toc-section\" id=\"What_are_Final_Accounts\"><\/span>What are Final Accounts?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Final Accounts are financial statements prepared at the end of an accounting period to determine the profit or loss of a business and show its financial position. They are prepared using information recorded in the books of accounts, including the ledger balances and Trial Balance. These statements help business owners, investors, and other stakeholders understand the financial performance of the business. The main components of Final Accounts for a sole proprietorship or partnership are:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Trading Account:<\/strong> Calculates gross profit or gross loss from trading activities.<\/li>\n\n\n\n<li><strong>Profit and Loss Account:<\/strong> Calculates net profit or net loss after considering indirect expenses and other income.<\/li>\n\n\n\n<li><strong>Balance Sheet:<\/strong> Shows the assets, liabilities, and capital of the business on a particular date.<\/li>\n<\/ul>\n\n\n\n<div class=\"wp-block-buttons is-content-justification-center is-layout-flex wp-container-core-buttons-is-layout-16018d1d wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link wp-element-button\" href=\"https:\/\/www.oliveboard.in\/upsc-epfo-prep-kit\/?ref=contac-upsc-epfo-final-accounts-pq\" target=\"_blank\" rel=\"noreferrer noopener\">Check Out UPSC EPFO Prep Kit<\/a><\/div>\n<\/div>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Download_UPSC_EPFO_Preparation_of_Final_Accounts_Quiz_PDF\"><\/span>Download UPSC EPFO Preparation of Final Accounts Quiz PDF<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The UPSC EPFO Preparation of Final Accounts Quiz PDF is useful for revising important accounting concepts related to Trading Accounts, Profit and Loss Accounts, Balance Sheets, gross profit and loss, net profit and loss, and year-end adjustments. <\/p>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><th><strong>Particulars<\/strong><\/th><th><strong>Link<\/strong><\/th><\/tr><tr><td>UPSC EPFO Final Accounts Practice Quiz<\/td><td><a href=\"https:\/\/www.oliveboard.in\/upsc-epfo-prep-kit\/?ref=contac-upsc-epfo-final-accounts-pq\" target=\"_blank\" rel=\"noreferrer noopener\">Download Now<\/a><\/td><\/tr><tr><td>UPSC EPFO Previous Year Question Papers<\/td><td><a href=\"https:\/\/www.oliveboard.in\/blog\/upsc-epfo-previous-year-question-papers\/?ref=contac-upsc-epfo-final-accounts-pq\" target=\"_blank\" rel=\"noreferrer noopener\">Download Now<\/a><\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Attempt_UPSC_EPFO_Preparation_of_Final_Accounts_Quiz\"><\/span>Attempt UPSC EPFO Preparation of Final Accounts Quiz<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Test your preparation with the UPSC EPFO Final Accounts Practice Quiz and revise important concepts such as Trading Accounts, Profit and Loss Accounts, Balance Sheets, depreciation, outstanding expenses, prepaid expenses, and accrued income. <\/p>\n\n\n\n<!DOCTYPE html>\n<html lang=\"en\">\n<head>\n<meta charset=\"UTF-8\">\n<link rel=\"stylesheet\" href=\"https:\/\/courses.oliveboard.in\/edge\/css\/login-modal-for-blog.css\">\n\n<style>\n#quiz-1-sticky-header {\n  position: sticky;\n  top: 0;\n  z-index: 100;\n  background: #1565c0;\n  color: #fff;\n  padding: 12px 20px;\n  border-radius: 10px 10px 0 0;\n  display: flex;\n  justify-content: space-between;\n  align-items: center;\n  font-size: 16px;\n  font-weight: bold;\n  box-shadow: 0 2px 8px rgba(0,0,0,0.2);\n  margin: -20px -20px 20px -20px;\n}\n\n#quiz-1-score-badge {\n  background: rgba(255,255,255,0.2);\n  padding: 4px 12px;\n  border-radius: 20px;\n  font-size: 15px;\n  white-space: nowrap;\n}\n#quiz-1 * { box-sizing: border-box; }\n\n#quiz-1 .quiz-container {\n  max-width: 700px;\n  margin: auto;\n  padding: 20px;\n  background: #fff;\n  border-radius: 14px;\n  box-shadow: 0 6px 16px rgba(0,0,0,0.12);\n}\n\n#quiz-1 h2 {\n  text-align: center;\n}\n\n#quiz-1 .question {\n  margin-bottom: 22px;\n}\n\n#quiz-1 .question p {\n  font-weight: bold;\n}\n\n#quiz-1 button {\n  width: 100%;\n  padding: 12px;\n  margin: 6px 0;\n  border: none;\n  border-radius: 6px;\n  background: #e0e0e0;\n  color: #000;\n  font-size: 16px;\n  cursor: pointer;\n}\n\n#quiz-1 button:hover {\n  background: #d5d5d5;\n}\n\n#quiz-1 button.correct {\n  background: #4caf50;\n  color: #000;\n}\n\n#quiz-1 button.wrong {\n  background: #f44336;\n  color: #000;\n}\n\n#quiz-1 button.locked {\n  pointer-events: none;\n}\n\n\/* SUMMARY *\/\n#quiz-1 .final-summary {\n  margin-top: 40px;\n  padding: 20px;\n  border-radius: 14px;\n  background: #fafafa;\n  border: 2px solid #4caf50;\n}\n\n#quiz-1 .final-summary h3 {\n  text-align: center;\n  margin-bottom: 20px;\n}\n\n#quiz-1 .summary-row {\n  display: grid;\n  grid-template-columns: 120px 1fr 40px;\n  gap: 10px;\n  align-items: center;\n  margin-bottom: 12px;\n  font-weight: bold;\n}\n\n#quiz-1 .summary-bar {\n  height: 14px;\n  background: #ddd;\n  border-radius: 10px;\n  overflow: hidden;\n}\n\n#quiz-1 .bar-fill {\n  height: 100%;\n  width: 0%;\n}\n\n#quiz-1 .bar-attempted { background: #2196f3; }\n#quiz-1 .bar-correct { background: #4caf50; }\n#quiz-1 .bar-wrong { background: #f44336; }\n#quiz-1 .bar-unattempted { background: #9e9e9e; width: 100%; }\n\n#quiz-1 .final-score {\n  text-align: center;\n  font-size: 22px;\n  margin-top: 20px;\n}\n\n#quiz-1 .score-value {\n  font-size: 30px;\n  margin-left: 8px;\n}\n<\/style>\n<\/head>\n\n<body>\n<div id=\"quiz-1\">\n  <div class=\"quiz-container\">\n<div id=\"quiz-1-sticky-header\">\n  <span> UPSC EPFO Preparation of Final Accounts Quiz <\/span>\n  <span id=\"quiz-1-score-badge\">Score: <strong id=\"quiz-1-score-value\">0.00<\/strong><\/span>\n<\/div>\n\n    <!-- QUESTIONS -->\n\n<div class=\"question\" data-answered=\"false\">\n  <p>1. Which account determines the gross profit earned by a trading concern?<\/p>\n  <button data-correct=\"true\">(A) Trading Account<\/button>\n  <button data-correct=\"false\">(B) Cash Book<\/button>\n  <button data-correct=\"false\">(C) Capital Account<\/button>\n  <button data-correct=\"false\">(D) Balance Sheet<\/button>\n<\/div>\n\n<div class=\"question\" data-answered=\"false\">\n  <p>2. Which item is ordinarily shown on the credit side of the Trading Account?<\/p>\n  <button data-correct=\"false\">(A) Carriage inward<\/button>\n  <button data-correct=\"true\">(B) Net sales<\/button>\n  <button data-correct=\"false\">(C) Wages on production<\/button>\n  <button data-correct=\"false\">(D) Opening stock<\/button>\n<\/div>\n\n<div class=\"question\" data-answered=\"false\">\n  <p>3. Which of the following is a direct expense in a manufacturing or trading concern?<\/p>\n  <button data-correct=\"false\">(A) Selling commission<\/button>\n  <button data-correct=\"false\">(B) Office rent<\/button>\n  <button data-correct=\"true\">(C) Carriage inward on purchases<\/button>\n  <button data-correct=\"false\">(D) Advertisement<\/button>\n<\/div>\n\n<div class=\"question\" data-answered=\"false\">\n  <p>4. When closing stock is given as an adjustment outside the trial balance, it is generally shown in:<\/p>\n  <button data-correct=\"false\">(A) Liabilities side of Balance Sheet only<\/button>\n  <button data-correct=\"false\">(B) Debit side of Trading Account only<\/button>\n  <button data-correct=\"false\">(C) Credit side of Profit and Loss Account only<\/button>\n  <button data-correct=\"true\">(D) Credit side of Trading Account and assets side of Balance Sheet<\/button>\n<\/div>\n\n<div class=\"question\" data-answered=\"false\">\n  <p>5. Outstanding wages relating to production are treated as:<\/p>\n  <button data-correct=\"true\">(A) Direct expense and current liability<\/button>\n  <button data-correct=\"false\">(B) Capital expenditure only<\/button>\n  <button data-correct=\"false\">(C) Drawings from capital<\/button>\n  <button data-correct=\"false\">(D) Indirect income and asset<\/button>\n<\/div>\n\n<div class=\"question\" data-answered=\"false\">\n  <p>6. Which of the following is normally charged to the Profit and Loss Account rather than the Trading Account?<\/p>\n  <button data-correct=\"false\">(A) Direct wages<\/button>\n  <button data-correct=\"true\">(B) Office salaries<\/button>\n  <button data-correct=\"false\">(C) Freight inward<\/button>\n  <button data-correct=\"false\">(D) Opening stock<\/button>\n<\/div>\n\n<div class=\"question\" data-answered=\"false\">\n  <p>7. Prepaid insurance is usually presented in the Balance Sheet as:<\/p>\n  <button data-correct=\"false\">(A) Current liability<\/button>\n  <button data-correct=\"false\">(B) Contingent liability<\/button>\n  <button data-correct=\"true\">(C) Current asset<\/button>\n  <button data-correct=\"false\">(D) Capital reserve<\/button>\n<\/div>\n\n<div class=\"question\" data-answered=\"false\">\n  <p>8. Which statement reports assets, liabilities and equity at a particular date?<\/p>\n  <button data-correct=\"false\">(A) Profit and Loss Account<\/button>\n  <button data-correct=\"false\">(B) Trading Account<\/button>\n  <button data-correct=\"false\">(C) Sales Book<\/button>\n  <button data-correct=\"true\">(D) Balance Sheet<\/button>\n<\/div>\n\n<div class=\"question\" data-answered=\"false\">\n  <p>9. If closing inventory is overstated, assuming all else remains unchanged, current-year gross profit will be:<\/p>\n  <button data-correct=\"true\">(A) Overstated<\/button>\n  <button data-correct=\"false\">(B) Equal to net sales<\/button>\n  <button data-correct=\"false\">(C) Unchanged<\/button>\n  <button data-correct=\"false\">(D) Understated<\/button>\n<\/div>\n\n<div class=\"question\" data-answered=\"false\">\n  <p>10. Goods withdrawn by the proprietor for personal use are ordinarily treated as:<\/p>\n  <button data-correct=\"false\">(A) Long-term loan<\/button>\n  <button data-correct=\"true\">(B) Drawings and reduction of purchases or inventory<\/button>\n  <button data-correct=\"false\">(C) Office expense<\/button>\n  <button data-correct=\"false\">(D) Sales revenue<\/button>\n<\/div>\n\n<div class=\"question\" data-answered=\"false\">\n  <p>11. Which adjustment records the periodic allocation of a fixed asset\u2019s depreciable amount?<\/p>\n  <button data-correct=\"false\">(A) Bad debts recovered<\/button>\n  <button data-correct=\"false\">(B) Accrued income<\/button>\n  <button data-correct=\"true\">(C) Depreciation<\/button>\n  <button data-correct=\"false\">(D) Capital introduced<\/button>\n<\/div>\n\n<div class=\"question\" data-answered=\"false\">\n  <p>12. An amount received from a customer for next year\u2019s services is:<\/p>\n  <button data-correct=\"false\">(A) Current-year income<\/button>\n  <button data-correct=\"false\">(B) Prepaid expense<\/button>\n  <button data-correct=\"false\">(C) Capital reserve<\/button>\n  <button data-correct=\"true\">(D) Unearned revenue, a liability<\/button>\n<\/div>\n\n<div class=\"question\" data-answered=\"false\">\n  <p>13. Interest accrued on a fixed deposit but not yet received is ordinarily:<\/p>\n  <button data-correct=\"true\">(A) Income and current asset<\/button>\n  <button data-correct=\"false\">(B) Drawings<\/button>\n  <button data-correct=\"false\">(C) Reduction of bank balance<\/button>\n  <button data-correct=\"false\">(D) Expense and liability<\/button>\n<\/div>\n\n<div class=\"question\" data-answered=\"false\">\n  <p>14. Which error generally leaves the trial balance totals unaffected but misstates profit?<\/p>\n  <button data-correct=\"false\">(A) Posting only debit side of a journal entry<\/button>\n  <button data-correct=\"true\">(B) Treating revenue expenditure as capital expenditure<\/button>\n  <button data-correct=\"false\">(C) Posting a debit amount as credit in one account<\/button>\n  <button data-correct=\"false\">(D) Incorrect addition of one ledger balance<\/button>\n<\/div>\n\n<div class=\"question\" data-answered=\"false\">\n  <p>15. Which item normally appears under owners\u2019 equity in a sole-proprietor Balance Sheet?<\/p>\n  <button data-correct=\"false\">(A) Accrued wages<\/button>\n  <button data-correct=\"false\">(B) Trade payables<\/button>\n  <button data-correct=\"true\">(C) Closing capital<\/button>\n  <button data-correct=\"false\">(D) Bank overdraft<\/button>\n<\/div>\n\n<div class=\"question\" data-answered=\"false\">\n  <p>16. A provision for doubtful debts against receivables generally:<\/p>\n  <button data-correct=\"false\">(A) Increases gross sales<\/button>\n  <button data-correct=\"false\">(B) Is shown as owner drawings<\/button>\n  <button data-correct=\"false\">(C) Increases closing inventory<\/button>\n  <button data-correct=\"true\">(D) Reduces the net carrying amount of receivables<\/button>\n<\/div>\n\n<div class=\"question\" data-answered=\"false\">\n  <p>17. When goods are sold on approval and approval is still pending at year-end, they are ordinarily:<\/p>\n  <button data-correct=\"true\">(A) Excluded from sales and included in inventory, if control has not transferred<\/button>\n  <button data-correct=\"false\">(B) Shown as proprietor drawings<\/button>\n  <button data-correct=\"false\">(C) Always treated as completed sales<\/button>\n  <button data-correct=\"false\">(D) Recorded as bad debts<\/button>\n<\/div>\n\n<div class=\"question\" data-answered=\"false\">\n  <p>18. The normal balance of accumulated depreciation is:<\/p>\n  <button data-correct=\"false\">(A) Nil by definition<\/button>\n  <button data-correct=\"true\">(B) Credit<\/button>\n  <button data-correct=\"false\">(C) Always equal to sales<\/button>\n  <button data-correct=\"false\">(D) Debit<\/button>\n<\/div>\n\n<div class=\"question\" data-answered=\"false\">\n  <p>19. Bad debts written off during the year are generally:<\/p>\n  <button data-correct=\"false\">(A) Added to fixed assets<\/button>\n  <button data-correct=\"false\">(B) Credited to Trading Account<\/button>\n  <button data-correct=\"true\">(C) Charged to Profit and Loss Account<\/button>\n  <button data-correct=\"false\">(D) Added to capital<\/button>\n<\/div>\n\n<div class=\"question\" data-answered=\"false\">\n  <p>20. Which of the following best describes a contingent liability?<\/p>\n  <button data-correct=\"false\">(A) A confirmed trade receivable<\/button>\n  <button data-correct=\"false\">(B) An unconditional item of inventory<\/button>\n  <button data-correct=\"false\">(C) An expense paid in advance<\/button>\n  <button data-correct=\"true\">(D) A possible obligation dependent on uncertain future events<\/button>\n<\/div>\n\n    <!-- FINAL SUMMARY -->\n    <div class=\"final-summary\">\n      <h3>Quiz Summary <\/h3>\n\n      <div class=\"summary-row\">\n        <span>Attempted<\/span>\n        <div class=\"summary-bar\"><div class=\"bar-fill bar-attempted\" data-summary=\"attempted\"><\/div><\/div>\n        <span data-count=\"attempted\">0<\/span>\n      <\/div>\n\n      <div class=\"summary-row\">\n        <span>Correct<\/span>\n        <div class=\"summary-bar\"><div class=\"bar-fill bar-correct\" data-summary=\"correct\"><\/div><\/div>\n        <span data-count=\"correct\">0<\/span>\n      <\/div>\n\n      <div class=\"summary-row\">\n        <span>Wrong<\/span>\n        <div class=\"summary-bar\"><div class=\"bar-fill bar-wrong\" data-summary=\"wrong\"><\/div><\/div>\n        <span data-count=\"wrong\">0<\/span>\n      <\/div>\n\n      <div class=\"summary-row\">\n        <span>Unattempted<\/span>\n        <div class=\"summary-bar\"><div class=\"bar-fill bar-unattempted\" data-summary=\"unattempted\"><\/div><\/div>\n        <span data-count=\"unattempted\">0<\/span>\n      <\/div>\n\n      <div class=\"final-score\">\n        Final Score: <span class=\"score-value\" data-score>0.0<\/span>\n      <\/div>\n    <\/div>\n\n  <\/div>\n<\/div>\n<div class=\"modal modal-obls\" id=\"modal-signup\">\n        <div class=\"modal-background\"><\/div>\n        <div class=\"modal-content\">\n           <div class=\"obls-group\" id=\"obls-group1\">\n               <div class=\"obls-blk\">\n                   <span class=\"img-box\"><img decoding=\"async\" src=\"\/img\/img-delivery.svg\" alt=\"\"><\/span>\n                   <h2 id=\"display-register-text\"><span class=\"ez-toc-section\" id=\"Sign_Up\"><\/span>Sign Up<span class=\"ez-toc-section-end\"><\/span><\/h2>\n                   <div class=\"loginas-group loginas-group1 loginas-group-single\">\n <div id=\"g_id_onload\" data-client_id=\"506321490093-i3j96ah9gn1sv3khntnd1rnv5jebt5j4.apps.googleusercontent.com\" ,=\"\" data-use_fedcm_for_prompt=\"true\" data-callback=\"handleOnetapResponse\">\n    <\/div>\n    <div class=\"g_id_signin\" data-type=\"standard\"><div class=\"S9gUrf-YoZ4jf\" style=\"position: relative;\"><div><\/div><iframe src=\"https:\/\/accounts.google.com\/gsi\/button?type=standard&amp;is_fedcm_supported=true&amp;client_id=506321490093-i3j96ah9gn1sv3khntnd1rnv5jebt5j4.apps.googleusercontent.com&amp;iframe_id=gsi_437394_8652&amp;cas=pwXumGxyCMNtIbjaV30qchi2A1vUar%2Faz%2FOE5HQ%2B0Zc\" class=\"L5Fo6c-PQbLGe\" allow=\"identity-credentials-get\" id=\"gsi_437394_8652\" title=\"Sign in with Google Button\" style=\"display: block; position: relative; top: 0px; left: 0px; height: 44px; width: 204px; border: 0px; margin: -2px -10px;\"><\/iframe><\/div><\/div>\n                   <\/div>\n                   <h6 class=\"signup-subheader\">Or, register with email<\/h6>\n                   <label class=\"errormsg txt-red courseUp\"><\/label>\n                   <div class=\"formcontrol-group\">\n                        <span class=\"icon\"><img decoding=\"async\" src=\"\/img\/ic-mail.svg\" alt=\"\"><\/span>\n                        <input type=\"email\" name=\"email\" class=\"formcontrol ob-inputfield\" id=\"course-uemail\" required=\"\">\n                        <span class=\"floating-label\" style=\"top: 19px; font-size: 12px;\">Email Id<\/span>\n                   <\/div>\n                   <div class=\"formcontrol-group\">\n                        <span class=\"icon\"><img decoding=\"async\" src=\"\/img\/ic-mobile-black.svg\" alt=\"\"><\/span>\n         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onclick=\"courseInValidation('https:\/\/u1.oliveboard.in\/exams\/?c=dashboard&amp;i=common')\">Submit<\/button>\n                       <form method=\"post\" action=\"https:\/\/login.oliveboard.in\/login\/next.php\" id=\"snf1\">\n                        <input type=\"hidden\" name=\"email\" value=\"\" id=\"lemailnext\">\n                        <\/form>\n                   <\/div><!-- end login group -->\n                   <div id=\"forgotpwd-group-abc\" class=\"lfp-group-abc forgotpwd-group-abc\"><!-- start forgotpwd group -->\n                       <h2><span class=\"ez-toc-section\" id=\"Forgot_Password\"><\/span>Forgot Password<span class=\"ez-toc-section-end\"><\/span><\/h2>\n                       <p class=\"secintro-txt\">Please enter the Email ID we will send you a Email with the link to reset the password.<\/p>\n                       <label class=\"errormsg txt-red rePassMsg\"><\/label>\n                       <div class=\"formcontrol-group formcontrol-group-fp\">\n          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id=\"g_id_onload\" data-client_id=\"506321490093-i3j96ah9gn1sv3khntnd1rnv5jebt5j4.apps.googleusercontent.com\" ,=\"\" data-use_fedcm_for_prompt=\"true\" data-callback=\"handleOnetapResponse\">\n    <\/div>\n    <div class=\"g_id_signin\" data-type=\"standard\"><div class=\"S9gUrf-YoZ4jf\" style=\"position: relative;\"><div><div tabindex=\"0\" role=\"button\" aria-labelledby=\"button-label\" class=\"nsm7Bb-HzV7m-LgbsSe  hJDwNd-SxQuSe i5vt6e-Ia7Qfc uaxL4e-RbRzK\"><div class=\"nsm7Bb-HzV7m-LgbsSe-MJoBVe\"><\/div><div class=\"nsm7Bb-HzV7m-LgbsSe-bN97Pc-sM5MNb \"><div class=\"nsm7Bb-HzV7m-LgbsSe-Bz112c\"><svg version=\"1.1\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" viewBox=\"0 0 48 48\" class=\"LgbsSe-Bz112c\"><g><path fill=\"#EA4335\" d=\"M24 9.5c3.54 0 6.71 1.22 9.21 3.6l6.85-6.85C35.9 2.38 30.47 0 24 0 14.62 0 6.51 5.38 2.56 13.22l7.98 6.19C12.43 13.72 17.74 9.5 24 9.5z\"><\/path><path fill=\"#4285F4\" d=\"M46.98 24.55c0-1.57-.15-3.09-.38-4.55H24v9.02h12.94c-.58 2.96-2.26 5.48-4.78 7.18l7.73 6c4.51-4.18 7.09-10.36 7.09-17.65z\"><\/path><path fill=\"#FBBC05\" d=\"M10.53 28.59c-.48-1.45-.76-2.99-.76-4.59s.27-3.14.76-4.59l-7.98-6.19C.92 16.46 0 20.12 0 24c0 3.88.92 7.54 2.56 10.78l7.97-6.19z\"><\/path><path fill=\"#34A853\" d=\"M24 48c6.48 0 11.93-2.13 15.89-5.81l-7.73-6c-2.15 1.45-4.92 2.3-8.16 2.3-6.26 0-11.57-4.22-13.47-9.91l-7.98 6.19C6.51 42.62 14.62 48 24 48z\"><\/path><path fill=\"none\" d=\"M0 0h48v48H0z\"><\/path><\/g><\/svg><\/div><span class=\"nsm7Bb-HzV7m-LgbsSe-BPrWId\">Sign in with Google<\/span><span class=\"L6cTce\" id=\"button-label\">Sign in with Google. Opens in new tab<\/span><\/div><\/div><\/div><iframe src=\"https:\/\/accounts.google.com\/gsi\/button?type=standard&amp;is_fedcm_supported=true&amp;client_id=506321490093-i3j96ah9gn1sv3khntnd1rnv5jebt5j4.apps.googleusercontent.com&amp;iframe_id=gsi_437400_306436&amp;cas=pwXumGxyCMNtIbjaV30qchi2A1vUar%2Faz%2FOE5HQ%2B0Zc\" class=\"L5Fo6c-PQbLGe\" allow=\"identity-credentials-get\" id=\"gsi_437400_306436\" title=\"Sign in with Google Button\" style=\"display: block; position: relative; top: 0px; left: 0px; height: 0px; width: 0px; border: 0px;\"><\/iframe><\/div><\/div>\n\n\n                   <\/div>\n                    <p class=\"obls-footer\">New to Oliveboard?<button class=\"btn btn-xs btn-switch-obls\" id=\"btn-show-modal-signup\">Register<\/button><\/p>\n               <\/div> \n            <\/div> \n            <div class=\"success-msg-group\" id=\"success-msg-group\"><!-- success msg -->\n                <div class=\"success-msg-blk\" id=\"success-msg-blk\">\n                    <span class=\"img-box\"><img decoding=\"async\" src=\"\/img\/success-ellipse.svg\" alt=\"\"><\/span>\n                    <h2 id=\"fpwd-success-msg-title\"><span class=\"ez-toc-section\" id=\"i\"><\/span>&nbsp;<span class=\"ez-toc-section-end\"><\/span><\/h2>\n                    <p id=\"fpwd-success-msg-text\">&nbsp;<\/p>\n                    <div class=\"login-btn\">\n                        <button type=\"button\" class=\"btn btn-md btn-tblue modal-obls-close\">Ok<\/button>\n                    <\/div>\n\n                <\/div>\n            <\/div><!-- success msg -->\n\n        <\/div>\n        <button class=\"modal-close is-large modal-obls-close\" aria-label=\"close\"><\/button>\n    <\/div>\n\n<script src=\"https:\/\/s3-ap-southeast-1.amazonaws.com\/sg2.oliveboard.in\/static\/js\/jquery.js\"><\/script>\n\n<script>\nvar boxurl = window.location.href + '?log=1';\n\nfunction getUrlParam(name, defaultValue) {\n    const params = new URLSearchParams(window.location.search);\n    return params.has(name) ? params.get(name) : defaultValue;\n}\n\nvar l_log = getUrlParam('log', 0);\n<\/script>\n<script src=\"https:\/\/www.oliveboard.in\/js\/coursecommon.js?v=12\"><\/script>\n\n\n<script>\n(() => {\n  const quizContainer = document.getElementById('quiz-1');\n  const STORAGE_KEY = 'quiz_1_state';\n  let score = 0;\n  let attempted = 0;\n  let correct = 0;\n  let wrong = 0;\n\n  const questions = quizContainer.querySelectorAll(\".question\");\n  const total = questions.length;\n\n  function loadState() {\n    try { return JSON.parse(sessionStorage.getItem(STORAGE_KEY) || '{}'); }\n    catch { return {}; }\n  }\n\n  function saveState(data) {\n    sessionStorage.setItem(STORAGE_KEY, JSON.stringify(data));\n  }\n\n  function updateUI() {\n    const unattempted = total - attempted;\n    quizContainer.querySelector('[data-count=\"attempted\"]').textContent = attempted;\n    quizContainer.querySelector('[data-count=\"correct\"]').textContent = correct;\n    quizContainer.querySelector('[data-count=\"wrong\"]').textContent = wrong;\n    quizContainer.querySelector('[data-count=\"unattempted\"]').textContent = unattempted;\n    quizContainer.querySelector('[data-summary=\"attempted\"]').style.width = (attempted \/ total) * 100 + \"%\";\n    quizContainer.querySelector('[data-summary=\"correct\"]').style.width = (correct \/ total) * 100 + \"%\";\n    quizContainer.querySelector('[data-summary=\"wrong\"]').style.width = (wrong \/ total) * 100 + \"%\";\n    quizContainer.querySelector('[data-summary=\"unattempted\"]').style.width = (unattempted \/ total) * 100 + \"%\";\n    quizContainer.querySelector('[data-score]').textContent = score.toFixed(2);\n\n    \/\/ Live score update in sticky header\n    document.getElementById('quiz-1-score-value').textContent = score.toFixed(2);\n  }\n\n  function restoreQuestion(q, chosenIndex, wasCorrect) {\n    q.dataset.answered = \"true\";\n    const buttons = q.querySelectorAll(\"button\");\n    buttons.forEach(b => b.classList.add(\"locked\"));\n    if (wasCorrect) {\n      buttons[chosenIndex].classList.add(\"correct\");\n    } else {\n      buttons[chosenIndex].classList.add(\"wrong\");\n      q.querySelector(\"[data-correct='true']\").classList.add(\"correct\");\n    }\n  }\n\n  \/\/ Restore saved answers on page load\n  const savedAnswers = loadState();\nquestions.forEach((q, qIndex) => {\n    const saved = savedAnswers[qIndex];\n    if (saved !== undefined) {\n      attempted++;\n      if (saved.correct) { correct++; }\n      else { wrong++; }\n      restoreQuestion(q, saved.chosenIndex, saved.correct);\n    }\n  });\n  score = parseFloat((correct * 1 - wrong * 0.33).toFixed(2));\n  updateUI();\n\n  \/\/ Attach click handlers\n  questions.forEach((q, qIndex) => {\n    q.querySelectorAll(\"button\").forEach((btn, btnIndex) => {\n      btn.addEventListener(\"click\", () => {\n        if (q.dataset.answered === \"true\") return;\n        q.dataset.answered = \"true\";\n        attempted++;\n\n        if (attempted > 9 && l_log == 0) {\n          $('#modal-signup').addClass('is-active');\n        }\n\n        q.querySelectorAll(\"button\").forEach(b => b.classList.add(\"locked\"));\n        const isCorrect = btn.dataset.correct === \"true\";\n\n if (isCorrect) {\n          btn.classList.add(\"correct\");\n          correct++;\n        } else {\n          btn.classList.add(\"wrong\");\n          wrong++;\n          q.querySelector(\"[data-correct='true']\").classList.add(\"correct\");\n        }\n        score = parseFloat((correct * 1 - wrong * 0.33).toFixed(2));\n\n        savedAnswers[qIndex] = { chosenIndex: btnIndex, correct: isCorrect };\n        saveState(savedAnswers);\n        updateUI();\n      });\n    });\n  });\n\n  updateUI();\n})();\n<\/script>\n\n<\/body>\n<\/html>\n\n\n\n<p><\/p>\n\n\n\n<div class=\"wp-block-buttons is-content-justification-center is-layout-flex wp-container-core-buttons-is-layout-16018d1d wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link wp-element-button\" href=\"https:\/\/www.oliveboard.in\/upsc-epfo-apfc-mock-test\/?ref=contac-upsc-epfo-final-accounts-pq\" target=\"_blank\" rel=\"noreferrer noopener\">Attempt A Free UPSC EPFO APFC Mock Test Today!<\/a><\/div>\n<\/div>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_topics_are_covered_in_the_Final_Accounts_practice_quiz\"><\/span>What topics are covered in the Final Accounts practice quiz?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Final Accounts include different statements that explain the financial performance and position of a business. Candidates should understand the purpose of each statement, the items included in it, and the effect of common adjustments. <\/p>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><th>Topic<\/th><th>Important concepts<\/th><\/tr><tr><td>Trading Account<\/td><td>Opening stock, purchases, sales, direct expenses, closing stock, and gross profit or loss<\/td><\/tr><tr><td>Profit and Loss Account<\/td><td>Indirect expenses, other income, and net profit or loss<\/td><\/tr><tr><td>Balance Sheet<\/td><td>Assets, liabilities, capital, debtors, creditors, and cash balances<\/td><\/tr><tr><td>Year-end adjustments<\/td><td>Outstanding expenses, prepaid expenses, accrued income, and income received in advance<\/td><\/tr><tr><td>Depreciation<\/td><td>Recording depreciation as an expense and adjusting the value of assets<\/td><\/tr><tr><td>Bad debts<\/td><td>Treatment of bad debts and provision for doubtful debts<\/td><\/tr><tr><td>Trial Balance<\/td><td>Meaning, purpose, and difference from Final Accounts<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_are_the_objectives_of_preparing_Final_Accounts\"><\/span>What are the objectives of preparing Final Accounts?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Final Accounts provide a clear summary of a business&#8217;s financial performance and position. They help determine whether the business has earned a profit or suffered a loss during the accounting period. They also provide useful information for financial planning, decision-making, and compliance with applicable legal requirements.<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><th>Objective<\/th><th>Description<\/th><\/tr><tr><td>To calculate gross profit or loss<\/td><td>The Trading Account shows the result of buying and selling goods.<\/td><\/tr><tr><td>To calculate net profit or loss<\/td><td>The Profit and Loss Account considers indirect expenses and other income.<\/td><\/tr><tr><td>To determine financial position<\/td><td>The Balance Sheet presents assets, liabilities, and capital.<\/td><\/tr><tr><td>To support decision-making<\/td><td>Financial information helps owners and management plan business activities.<\/td><\/tr><tr><td>To meet reporting requirements<\/td><td>Financial statements support transparency, accountability, and applicable legal compliance.<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_are_the_main_components_of_Final_Accounts\"><\/span>What are the main components of Final Accounts?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Final Accounts consist of three main components for a typical sole proprietorship or partnership. Each component serves a different purpose and presents specific financial information. Together, they help explain the profitability and financial position of the business at the end of the accounting period.<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><th>Component<\/th><th>Purpose<\/th><th>Important items<\/th><\/tr><tr><td>Trading Account<\/td><td>Calculates gross profit or gross loss<\/td><td>Opening stock, purchases, sales, direct expenses, and closing stock<\/td><\/tr><tr><td>Profit and Loss Account<\/td><td>Calculates net profit or net loss<\/td><td>Gross profit, indirect expenses, and other income<\/td><\/tr><tr><td>Balance Sheet<\/td><td>Shows financial position on a particular date<\/td><td>Assets, liabilities, and capital<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<div class=\"wp-block-buttons is-content-justification-center is-layout-flex wp-container-core-buttons-is-layout-16018d1d wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link wp-element-button\" href=\"https:\/\/www.oliveboard.in\/upsc-epfo-apfc\/?ref=contac-upsc-epfo-final-accounts-pq\" target=\"_blank\" rel=\"noreferrer noopener\">Enroll  for UPSC EPFO APFC Online Courses<\/a><\/div>\n<\/div>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_is_a_Trading_Account_and_what_is_its_format\"><\/span>What is a Trading Account, and what is its format?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>A Trading Account is prepared to calculate the gross profit or gross loss earned from the buying and selling of goods. It records sales, opening stock, purchases, direct expenses, and closing stock. Direct expenses are costs related to purchasing goods or bringing them to a saleable condition, such as carriage inward and certain direct wages.<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><th>Debit side (Particulars)<\/th><th>Amount (\u20b9)<\/th><th>Credit side (Particulars)<\/th><th>Amount (\u20b9)<\/th><\/tr><tr><td>Opening stock<\/td><td>\u2014<\/td><td>Sales<\/td><td>\u2014<\/td><\/tr><tr><td>Purchases<\/td><td>\u2014<\/td><td>Closing stock<\/td><td>\u2014<\/td><\/tr><tr><td>Direct expenses, such as wages and carriage inward<\/td><td>\u2014<\/td><td>Gross loss, if applicable<\/td><td>\u2014<\/td><\/tr><tr><td>Gross profit, if applicable<\/td><td>\u2014<\/td><td><\/td><td><\/td><\/tr><tr><td><strong>Total<\/strong><\/td><td><strong>\u2014<\/strong><\/td><td><strong>Total<\/strong><\/td><td><strong>\u2014<\/strong><\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Formula for gross profit:<\/strong>\n<ul class=\"wp-block-list\">\n<li>Gross profit = Net sales \u2212 Cost of goods sold<\/li>\n\n\n\n<li>Cost of goods sold = Opening stock + Net purchases + Direct expenses \u2212 Closing stock<\/li>\n\n\n\n<li>Here, net sales and net purchases are calculated after considering relevant returns and adjustments.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_is_a_Profit_and_Loss_Account_and_what_is_its_format\"><\/span>What is a Profit and Loss Account, and what is its format?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>A Profit and Loss Account is prepared after the Trading Account to calculate the net profit or net loss of a business. It includes indirect expenses, such as office salaries, rent, advertising, and depreciation, along with other income, such as commission received and interest received. The final result shows the profit remaining or the loss incurred after considering these items.<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><th>Debit side (Particulars)<\/th><th>Amount (\u20b9)<\/th><th>Credit side (Particulars)<\/th><th>Amount (\u20b9)<\/th><\/tr><tr><td>Office salaries<\/td><td>\u2014<\/td><td>Gross profit brought down<\/td><td>\u2014<\/td><\/tr><tr><td>Rent and taxes<\/td><td>\u2014<\/td><td>Commission received<\/td><td>\u2014<\/td><\/tr><tr><td>Advertising expenses<\/td><td>\u2014<\/td><td>Discount received<\/td><td>\u2014<\/td><\/tr><tr><td>Depreciation<\/td><td>\u2014<\/td><td>Interest received<\/td><td>\u2014<\/td><\/tr><tr><td>Other indirect expenses<\/td><td>\u2014<\/td><td>Other income<\/td><td>\u2014<\/td><\/tr><tr><td>Net profit, if applicable<\/td><td>\u2014<\/td><td>Net loss, if applicable<\/td><td>\u2014<\/td><\/tr><tr><td><strong>Total<\/strong><\/td><td><strong>\u2014<\/strong><\/td><td><strong>Total<\/strong><\/td><td><strong>\u2014<\/strong><\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Formula for net profit:<\/strong>\n<ul class=\"wp-block-list\">\n<li>Net profit = Gross profit + Other income \u2212 Indirect expenses<\/li>\n\n\n\n<li>If the total expenses exceed the gross profit and other income, the business records a net loss instead.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_is_a_Balance_Sheet_and_what_is_its_format\"><\/span>What is a Balance Sheet, and what is its format?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>A Balance Sheet is a financial statement that shows the financial position of a business on a particular date, usually the last day of the accounting year. It lists assets, liabilities, and capital to show what the business owns and what it owes. It also helps assess the business&#8217;s liquidity and solvency.<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><th>Liabilities and capital<\/th><th>Amount (\u20b9)<\/th><th>Assets<\/th><th>Amount (\u20b9)<\/th><\/tr><tr><td>Capital<\/td><td>\u2014<\/td><td>Fixed assets<\/td><td>\u2014<\/td><\/tr><tr><td>Add: Net profit<\/td><td>\u2014<\/td><td>Investments<\/td><td>\u2014<\/td><\/tr><tr><td>Less: Drawings<\/td><td>\u2014<\/td><td>Current assets<\/td><td>\u2014<\/td><\/tr><tr><td>Creditors<\/td><td>\u2014<\/td><td>Closing stock<\/td><td>\u2014<\/td><\/tr><tr><td>Bills payable<\/td><td>\u2014<\/td><td>Debtors<\/td><td>\u2014<\/td><\/tr><tr><td>Outstanding expenses<\/td><td>\u2014<\/td><td>Cash in hand and bank<\/td><td>\u2014<\/td><\/tr><tr><td>Other liabilities<\/td><td>\u2014<\/td><td>Other assets<\/td><td>\u2014<\/td><\/tr><tr><td><strong>Total<\/strong><\/td><td><strong>\u2014<\/strong><\/td><td><strong>Total<\/strong><\/td><td><strong>\u2014<\/strong><\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p>The total of both sides must be equal when the Balance Sheet is correctly prepared. The format may vary depending on the type of business and the applicable reporting requirements.<\/p>\n\n\n\n<div class=\"wp-block-buttons is-content-justification-center is-layout-flex wp-container-core-buttons-is-layout-16018d1d wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link wp-element-button\" href=\"https:\/\/www.oliveboard.in\/upsc-epfo-apfc-study-plan\/?ref=contac-upsc-epfo-final-accounts-pq\" target=\"_blank\" rel=\"noreferrer noopener\">Check out the UPSC EPFO Study Plan<\/a><\/div>\n<\/div>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_adjustments_are_made_while_preparing_Final_Accounts\"><\/span>What adjustments are made while preparing Final Accounts?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Year-end adjustments ensure that income and expenses are recorded in the correct accounting period. They are generally made on an accrual basis, meaning transactions are recognised when the income is earned or the expense is incurred, rather than only when cash is received or paid. These adjustments affect the Trading Account, Profit and Loss Account, and Balance Sheet.<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><th>Adjustment<\/th><th>Treatment in Final Accounts<\/th><\/tr><tr><td>Outstanding expenses<\/td><td>Added to the related expense and shown as a liability.<\/td><\/tr><tr><td>Prepaid expenses<\/td><td>Deducted from the related expense and shown as an asset.<\/td><\/tr><tr><td>Accrued income<\/td><td>Added to the related income and shown as an asset.<\/td><\/tr><tr><td>Income received in advance<\/td><td>Deducted from the related income and shown as a liability.<\/td><\/tr><tr><td>Depreciation<\/td><td>Recorded as an expense and deducted from the asset&#8217;s carrying value.<\/td><\/tr><tr><td>Bad debts<\/td><td>Recorded as an expense and deducted from the amount recoverable from debtors.<\/td><\/tr><tr><td>Provision for doubtful debts<\/td><td>Recognised as an expense or adjustment, with the provision deducted from the relevant receivables.<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Why_are_Final_Accounts_important_for_a_business\"><\/span>Why are Final Accounts important for a business?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Final Accounts help business owners understand profitability, financial stability, and the overall performance of their operations. They also provide information that supports planning, financial analysis, and compliance with applicable reporting requirements. For students preparing for the UPSC EPFO exam, this topic builds a foundation for understanding basic accounting and financial statements. The importance of Final Accounts includes:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Profitability analysis:<\/strong> Shows whether the business has earned a profit or suffered a loss.<\/li>\n\n\n\n<li><strong>Financial assessment:<\/strong> Provides information about assets, liabilities, and capital.<\/li>\n\n\n\n<li><strong>Business planning:<\/strong> Helps management make informed financial decisions.<\/li>\n\n\n\n<li><strong>Tax and compliance support:<\/strong> Provides financial information required for relevant reporting and tax-related purposes.<\/li>\n\n\n\n<li><strong>Transparency:<\/strong> Helps stakeholders understand the financial performance of the business.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_is_the_difference_between_a_Trial_Balance_and_Final_Accounts\"><\/span>What is the difference between a Trial Balance and Final Accounts?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>A Trial Balance and Final Accounts are different stages of the accounting process. A Trial Balance lists the debit and credit balances of ledger accounts and helps check their arithmetical agreement. Final Accounts use the relevant accounting information, along with necessary adjustments, to determine profit or loss and present the financial position of the business.<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><th>Basis<\/th><th>Trial Balance<\/th><th>Final Accounts<\/th><\/tr><tr><td>Meaning<\/td><td>A statement of ledger balances<\/td><td>Financial statements showing business results and financial position<\/td><\/tr><tr><td>Purpose<\/td><td>Checks the arithmetical agreement of debit and credit balances<\/td><td>Determines profit or loss and shows financial position<\/td><\/tr><tr><td>Preparation stage<\/td><td>Prepared before Final Accounts<\/td><td>Prepared after considering relevant adjustments<\/td><\/tr><tr><td>Main contents<\/td><td>Debit and credit balances<\/td><td>Trading Account, Profit and Loss Account, and Balance Sheet<\/td><\/tr><tr><td>Use<\/td><td>Helps in preparing financial statements<\/td><td>Helps owners and other stakeholders assess business performance<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-faqs\"><span class=\"ez-toc-section\" id=\"FAQs\"><\/span>FAQs<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<div class=\"schema-faq wp-block-yoast-faq-block\"><div class=\"schema-faq-section\" id=\"faq-question-1793097693350\"><strong class=\"schema-faq-question\">Q1. What are Final Accounts?<\/strong> <p class=\"schema-faq-answer\">Final Accounts are financial statements prepared at the end of an accounting period to determine profit or loss and show the financial position of the business.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1793097715881\"><strong class=\"schema-faq-question\"><strong>Q2. What are the main components of Final Accounts?<\/strong><\/strong> <p class=\"schema-faq-answer\">Trading Account, Profit &amp; Loss Account, and Balance Sheet.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1793097716910\"><strong class=\"schema-faq-question\">Q3. What is the purpose of preparing Final Accounts?<\/strong> <p class=\"schema-faq-answer\">To ascertain gross profit, net profit, and the overall financial position.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1793097717621\"><strong class=\"schema-faq-question\">Q4. What are common adjustments in Final Accounts?<\/strong> <p class=\"schema-faq-answer\">Outstanding expenses, prepaid expenses, accrued income, and depreciation.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1793097718233\"><strong class=\"schema-faq-question\">Q5. Why must the Balance Sheet always tally?<\/strong> <p class=\"schema-faq-answer\">Because every debit has a corresponding credit assets always equal liabilities plus capital.<\/p> <\/div> <\/div>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n<ul class=\"wp-block-latest-posts__list is-grid columns-3 wp-block-latest-posts\"><li><a class=\"wp-block-latest-posts__post-title\" href=\"https:\/\/www.oliveboard.in\/blog\/audit-strategy-planning-programme\/\">Attempt UPSC EPFO Audit Strategy, Planning &amp; Programme Quiz<\/a><\/li>\n<li><a class=\"wp-block-latest-posts__post-title\" href=\"https:\/\/www.oliveboard.in\/blog\/nature-objective-and-scope-of-auditing\/\">Nature, Objective, and Scope of Auditing for UPSC EPFO Aspirants<\/a><\/li>\n<li><a class=\"wp-block-latest-posts__post-title\" href=\"https:\/\/www.oliveboard.in\/blog\/ratio-analysis\/\">Attempt UPSC EPFO Ratio Analysis Practice Quiz &amp; Download PDF<\/a><\/li>\n<li><a class=\"wp-block-latest-posts__post-title\" href=\"https:\/\/www.oliveboard.in\/blog\/preparation-of-final-accounts\/\">UPSC EPFO Preparation of Final Accounts Practice Quiz &amp; PDF<\/a><\/li>\n<li><a class=\"wp-block-latest-posts__post-title\" href=\"https:\/\/www.oliveboard.in\/blog\/bills-of-exchange\/\">UPSC EPFO Bills of Exchange Practice Quiz and Download Free PDF<\/a><\/li>\n<li><a class=\"wp-block-latest-posts__post-title\" href=\"https:\/\/www.oliveboard.in\/blog\/accounting-standards\/\">Attempt UPSC EPFO Accounting Standards Quiz &amp; Download PDF<\/a><\/li>\n<\/ul>","protected":false},"excerpt":{"rendered":"<p>Final Accounts is an important accounting topic for candidates preparing for the UPSC EPFO exam. It explains how a business<\/p>\n","protected":false},"author":58,"featured_media":231046,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[10321],"tags":[18116,11528],"class_list":["post-231044","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-upsc-epfo","tag-preparation-of-final-accounts","tag-upsc-epfo","generate-columns","tablet-grid-50","mobile-grid-100","grid-parent","grid-50"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v26.6 (Yoast SEO v26.6) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Preparation of Final Accounts: Meaning, Format &amp; Objectives<\/title>\n<meta name=\"description\" content=\"Understand the preparation of final accounts and learn how they summarize a business&#039;s financial results over an accounting period.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.oliveboard.in\/blog\/preparation-of-final-accounts\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"UPSC EPFO Preparation of Final Accounts Practice Quiz &amp; PDF\" \/>\n<meta property=\"og:description\" content=\"Final Accounts is an important accounting topic for candidates preparing for the UPSC EPFO exam. It explains how a business calculates its gross profit or\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.oliveboard.in\/blog\/preparation-of-final-accounts\/\" \/>\n<meta property=\"og:site_name\" content=\"Oliveboard\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/Oliveboard\" \/>\n<meta property=\"article:published_time\" content=\"2026-10-27T11:39:47+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.oliveboard.in\/blog\/wp-content\/uploads\/2025\/10\/Accounting-Standards-1.webp\" \/>\n\t<meta property=\"og:image:width\" content=\"730\" \/>\n\t<meta property=\"og:image:height\" content=\"480\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/webp\" \/>\n<meta name=\"author\" content=\"AditiOB\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@Oliveboard\" \/>\n<meta name=\"twitter:site\" content=\"@Oliveboard\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"AditiOB\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"11 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"NewsArticle\",\"@id\":\"https:\/\/www.oliveboard.in\/blog\/preparation-of-final-accounts\/#article\",\"isPartOf\":{\"@id\":\"https:\/\/www.oliveboard.in\/blog\/preparation-of-final-accounts\/\"},\"author\":{\"name\":\"AditiOB\",\"@id\":\"https:\/\/www.oliveboard.in\/blog\/#\/schema\/person\/0cbc4ac8555ced346681804861de062c\"},\"headline\":\"UPSC EPFO Preparation of Final Accounts Practice Quiz &amp; 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I work as a Content Writer at Oliveboard, where I have been simplifying exam-related content for the past 4 years. I create clear and easy-to-understand guides for JAIIB, CAIIB, and UGC exams. My work includes breaking down notifications, admit cards, and exam updates, as well as preparing study plans and subject-wise strategies. My goal is to support working professionals in managing their exam preparation alongside a full-time job and to help them achieve career growth.\",\"sameAs\":[\"www.linkedin.com\/in\/aditi-chakraborty-131b3b379\"]},{\"@type\":\"Question\",\"@id\":\"https:\/\/www.oliveboard.in\/blog\/preparation-of-final-accounts\/#faq-question-1793097693350\",\"position\":1,\"url\":\"https:\/\/www.oliveboard.in\/blog\/preparation-of-final-accounts\/#faq-question-1793097693350\",\"name\":\"Q1. 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