State the order in which final accounts of a partnership firm are prepared

(A) Profit and Loss A/c
(B) Balance Sheet
(C) Trading A/c
(D) Profit & Loss Appropriation A/c
(E) Partners' Capital Accounts

Choose the correct answer from the options given below.

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

The correct answer is Option (4) - (C), (A), (D), (E), (B).

(C) Trading A/c

(A) Profit and Loss A/c

(D) Profit & Loss Appropriation A/c

(E) Partners' Capital Accounts

(B) Balance Sheet

Final accounts of partnership firm are prepared in the following manner-

* Trading account- This account summarizes the buying, selling, and expenses related to the firm's trading activities, resulting in the gross profit.

* Profit and loss account- This account builds upon the gross profit from the Trading Account, incorporating operating expenses and income to arrive at the net profit or loss for the period.

* Profit and loss Appropriation account- After calculating the profit or loss, the next step is to take the net profit or loss from the Profit and Loss Account and prepare profit and loss appropriation account. So, Net profit is transferred from the profit and loss account to the profit and loss appropriation account. All appropriations like interest on capital, salary to partners are provided to partners. The remaining profit after the appropriations is divisible profit.

* Capital account of partners- This account reflects each partner's initial capital contribution, any adjustments (drawings, interest on capital), and their final capital balance after profit or loss allocation.

* Balance sheet- This final statement presents the firm's financial position at a specific date. It shows the total assets, liabilities, and capital (including the final capital balances from the Partner's Capital Accounts).