Final accounts

Final accounts is a somewhat archaic bookkeeping term that refers to the final trial balance at the end of an accounting period from which the financial statements are derived. This final trial balance includes all of the journal entries used to close the books, such as:

  • Wage and payroll tax accruals
  • Income tax accruals
  • Asset write downs
  • Adjustments to reserves for returns, bad debts, and obsolete inventory
  • Depreciation and amortization
  • Overhead allocation
  • Customer billings

Thus, final accounts can refer to the final trial balance or the financial statements upon which they are based. The primary financial statements are the income statement, balance sheet, and statement of cash flows.

Since final accounts refers to a company's ending account balances, which in turn are used to create financial statements, this means that the final accounts reveal the results of the business during a period, its financial position at the end of that period, and its sources and uses of funds during that period (which is the purpose of the financial statements).

A final account, or final accounting, can also be the summarized statement issued when a business transaction has been concluded. For example, when someone leaves a hotel, they are given a final accounting of what they owe the hotel.