Finalizing accounts involves planning accounts with correct statistics and facts to determine the true benefit or loss that has been sustained.
It is usually prepared by the accountant and finalized by an auditor or a charted accountant.
The annual statement is compiled on the basis of information from the general ledger and accounting journal, the income statement, the balance sheet, the equity contribution statement, the cash flow statement and the previous reporting information.
Final accounts are:
- Profit and loss account
- Liabilities on the balance sheet
- Assets on the balance sheet
- Owners equity on balance sheet
- Manufacturing account
The main objective of finalization of account is to determine the net effect of all transactions and profit or loss arising from the operations are accurate. Business owners need to review the financial data on a regular basis to ensure that their company operates smoothly.