Identify the correct sequence to be followed while preparing of final account of a partnership firm ...........

Accountancy (CUET) Previous Year Papers

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Identify the correct sequence to be followed while preparing of final account of a partnership firm :

(A)Profit and Loss Appropriation Account

(B)Profit and Loss Account

(C)Trading Account

(D)Balance Sheet

Choose the correct answer from the options given below :

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CUET ACCOUNTANCY Previous Year Paper (2024)

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(C), (B), (A), (D)

(A), (C), (B), (D)

(B), (A), (D), (C)

(C), (B), (D), (A)

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Explanation:

Let's go through the correct sequence of preparing the final accounts for a partnership firm:

- Trading Account (C):

- First, prepare the Trading Account. This captures the direct incomes and expenses related to the trading activities of the firm. It helps in determining the Gross Profit or Loss.

- Profit and Loss Account (B):

- After determining the Gross Profit/Loss, you prepare the Profit and Loss Account. This account includes indirect expenses and incomes, and it helps in arriving at the firm's Net Profit or Loss.

- Profit and Loss Appropriation Account (A):

- This step involves appropriating the Net Profit as per the partnership agreement. It typically includes distribution of profits among partners, reserves, and other appropriations.

- Balance Sheet (D):

- Lastly, the Balance Sheet is prepared. It shows the financial position of the firm by listing assets, liabilities, and capital at the end of the accounting period.

Option:1 (C), (B), (A), (D) is the correct answer.