#6 CA FOUNDATION | SOLE TRAING FINAL ACCOUNT | BASIC WITH NEW TRICK AND EASY CONCEPT | ICAI SYLLABUS
Sole Trading Final Accounts – CA Foundation Detailed Description 1. Introduction to Sole Proprietorship A Sole Proprietorship or Sole Trading Concern is the simplest form of business organization, owned, managed, and controlled by a single individual. It is the most common form of business in India, particularly in small-scale sectors like retail shops, small service providers, etc. 2. Meaning of Final Accounts Final Accounts refer to the summary of all accounting transactions recorded in the books of a business during an accounting period. For a sole trader, the final accounts include: 1. Trading Account 2. Profit and Loss Account 3. Balance Sheet These accounts help determine the gross profit, net profit, and financial position of the business. 3. Objectives of Preparing Final Accounts 1. Ascertain Gross Profit or Loss 2. Calculate Net Profit or Loss 3. Know the Financial Position (Assets & Liabilities) 4. Taxation and Legal Compliance 5. Decision-Making 6. Comparison with Previous Years 4. Components of Final Accounts of a Sole Proprietor Final Accounts are broadly classified into: (A) Trading Account (B) Profit and Loss Account (C) Balance Sheet (A) Trading Account This account is prepared to find out gross profit or gross loss of the business for a particular period. (B) Profit and Loss Account Prepared to find out Net Profit or Net Loss. It includes all indirect incomes and expenses. (C) Balance Sheet The Balance Sheet is a statement of assets and liabilities on a particular date. It shows the financial position of the business. 5. Adjustments in Final Accounts Several adjustments are made based on additional information to ensure accrual-based accounting and matching of revenue with expenses. Common adjustments include: Closing Stock Outstanding Expenses Prepaid Expenses Accrued Income Income Received in Advance Depreciation Provision for Bad Debts Interest on Capital Interest on Drawings 6. Practical Example Given a trial balance and adjustments, final accounts are prepared using Trading Account, Profit and Loss Account, and Balance Sheet. 7. Important Notes for CA Foundation Students Use proper vertical formats as per ICAI suggestions Always mention adjustments clearly Link journal entries to final accounts Provide working notes 8. Common Errors to Avoid Misclassifying direct and indirect expenses Not showing adjustments in both accounts and balance sheet Unbalanced Balance Sheet Incorrect treatment of incomes/expenses 9. Revision Chart: Classification of Items Examples: Closing Stock: Trading A/c (credit) and Balance Sheet (asset) Outstanding Rent: Add to Expense (P&L) and show as Liability Depreciation: Expense in P&L, deduct from asset Interest on Drawings: Income in P&L, deduct from Capital 10. Conclusion The Final Accounts of a Sole Trader help determine business performance and position. Understanding format, objectives, and adjustments is essential for CA Foundation preparation. i just hope you all must have liked the video, so do comment your view and do like and share the channel if you all feel worth sharing the channel. Don’t forget to subscribe our channel / sam4sir / @sirajshaikhd. . Must check playlist for all other videos. ❣️ Like, share or subscribe karna mat bhulna..!!! For notes and important questions join our telegram channel : Telegram : skyeducationofficial (in case of link failure just search by name https://t.me/skyeducationofficial https://t.me/sirajshaikhdegreestudy Connect with me on all other social media networks Facebook : siraj shaikh Instagram : sam4sir00 Twitter : sirajsam4sir Snapchat : sam4sir (siraj shaikh) Telegram : sam4sir00 In this video, Siraj Shaikh from Degree Study explains *Sole Trading Final Accounts* in the easiest and most detailed way—perfect for CA Foundation students preparing for 2025 exams. 📚 Topics Covered: Meaning of Sole Proprietorship Trading, Profit & Loss Account Balance Sheet Format Adjustments with Examples Common Mistakes to Avoid This is a complete accounting lecture in Hinglish, specially designed for beginners and commerce students (Class 11, 12, and CA Foundation level). 👉 Don't forget to Like, Share & Subscribe to *Siraj Shaikh Degree Study* for more accounting and commerce content. #cafoundation #finalaccounts #sirajshaikh #degreestudy #accountinglecture