List out the objectives of final account? Write about significance of adjustments in Final Accounts

Answer 1

Objectives of final accounts:

1. To determine the profit or loss of the business during a specific period.
2. To provide information on the financial position of the business at the end of the accounting period.
3. To calculate the financial performance of the business and evaluate its efficiency.
4. To provide information for decision-making, such as assessing the profitability and liquidity of the business.
5. To comply with legal requirements, such as filing tax returns and financial reporting.

Significance of adjustments in Final Accounts:

1. Ensure accuracy: Adjustments help in ensuring that the final accounts accurately reflect the financial position and performance of the business by correcting any errors or omissions in the accounting records.
2. Match revenues and expenses: Adjustments help in matching revenues and expenses to the accounting period in which they are earned or incurred, which provides a true and fair view of the financial performance of the business.
3. Compliance with accounting standards: Adjustments help in complying with accounting standards by following the principles of accrual accounting and matching concept.
4. Provide a true picture: Adjustments help in providing a true and fair view of the financial position and performance of the business by reflecting all relevant transactions and events in the final accounts.
5. Improve decision-making: Adjustments help in providing accurate and reliable financial information, which can be used by management, investors, and other stakeholders for decision-making purposes.