Month: September 2026

Management Notes

Final Accounts of Banking Companies, Components and Formats

indiafreenotesby indiafreenotes1

Final Accounts of Banking Companies are financial statements prepared to determine the financial performance and financial position of a bank at the end of an accounting period. Since banking companies undertake specialised activities such as accepting deposits, granting loans and advances, investing funds, and providing financial services, their final accounts differ from those of ordinary business entities. Banks prepare a Balance Sheet, Profit and Loss Account, and relevant Schedules and Notes in the prescribed format. The preparation and presentation of these accounts are governed by the Banking Regulation Act, 1949, applicable Accounting Standards or Ind AS, and regulatory guidelines issued by the Reserve Bank of India (RBI). Final accounts provide important information about deposits, advances, investments, income, expenses, provisions, profitability, liquidity, and overall financial strength.

Functions of Final Accounts of Banking Companies:

1. Determination of Profit or Loss

Final accounts help determine the profit or loss of a banking company for a particular accounting period. The Profit and Loss Account records major sources of income such as interest earned, fees, commissions, and investment income, along with expenses such as interest paid, employee costs, administrative expenses, depreciation, and provisions. The difference between total income and total expenses indicates the bank’s financial result. This information helps management evaluate operational performance and make appropriate decisions. It also enables shareholders, regulators, and other stakeholders to assess the bank’s profitability and financial efficiency.

2. Showing Financial Position

The Balance Sheet prepared as part of final accounts shows the financial position of the banking company at the end of the accounting period. It presents important items such as capital, reserves, deposits, borrowings, loans and advances, investments, cash, and other assets and liabilities. This information helps users understand the bank’s financial strength and obligations. A properly prepared Balance Sheet also provides a basis for evaluating the bank’s liquidity, solvency, and asset structure. Therefore, final accounts provide a comprehensive picture of the resources available with the bank and the claims against those resources.

3. Assessment of Liquidity

Final accounts help stakeholders assess the liquidity position of a banking company. Banks must maintain sufficient liquid resources to meet withdrawal demands and other short term obligations. The Balance Sheet provides information about cash, balances with banks, investments, and other liquid assets compared with deposits and other liabilities. This enables management and regulators to evaluate whether the bank has adequate resources to meet its immediate financial commitments. Proper presentation of liquid assets and liabilities also supports monitoring of applicable cash reserve and liquidity requirements, contributing to confidence in the bank’s ability to meet customer obligations.

4. Evaluation of Asset Quality

Final accounts provide information that helps evaluate the quality of loans, advances, and investments held by a bank. Loans and advances are classified according to applicable RBI prudential norms, and appropriate provisions are recognised for potential losses. The financial statements and related schedules disclose information about non performing assets, provisions, and other relevant items where required. This allows management, regulators, investors, and other stakeholders to assess the level of credit risk associated with the bank’s assets. Proper reporting of asset quality promotes transparency and helps users understand the financial risks faced by the banking company.

5. Ensuring Regulatory Compliance

Final accounts help banking companies comply with the requirements of the Banking Regulation Act, 1949, applicable accounting standards, and RBI regulations. Banks are required to prepare and present financial statements in prescribed formats and provide relevant disclosures. Compliance ensures uniformity and consistency in banking financial reporting. It also enables the RBI and other authorities to monitor the financial condition and activities of banking institutions. Proper preparation of final accounts reduces the possibility of regulatory violations and accounting errors. Thus, final accounts serve as an important mechanism for maintaining legal, accounting, and prudential discipline in banking operations.

6. Providing Information to Stakeholders

Final accounts provide useful financial information to depositors, shareholders, creditors, investors, regulators, management, and other stakeholders. They show the bank’s income, expenses, assets, liabilities, capital, reserves, investments, and advances. Stakeholders can use this information to evaluate the bank’s profitability, financial strength, liquidity, and risk position. Shareholders may assess returns and performance, while depositors and creditors may consider the bank’s ability to meet its obligations. Regulators use the information for supervision and monitoring. Thus, final accounts serve as an important source of reliable financial information for various users.

7. Facilitating Comparison

Final accounts enable comparison of the financial performance and position of a bank across different accounting periods and, where appropriate, with other banks. Since banking companies prepare financial statements according to prescribed formats and applicable accounting requirements, users can analyse changes in deposits, advances, investments, income, expenses, profits, and provisions. Comparative analysis helps management identify improvements or weaknesses in operations. Investors and analysts can also evaluate trends in profitability, asset quality, and financial strength. Therefore, standardised final accounts promote meaningful financial analysis and assist stakeholders in making informed economic decisions.

8. Supporting Management Decision Making

Final accounts provide management with essential information for planning, control, and decision making. The financial statements reveal trends in deposits, lending, investment income, operating expenses, provisions, profitability, and liquidity. Management can use this information to assess the effectiveness of existing strategies and identify areas requiring improvement. For example, changes in interest income or loan quality may influence future lending policies, while liquidity information can guide funding and investment decisions. Thus, final accounts are not merely statutory statements but also important management tools that support effective financial planning and control within banking companies.

Components of Final Accounts of Banking Companies:

1. Balance Sheet

The Balance Sheet is a major component of the final accounts of a banking company. It presents the bank’s assets, liabilities, capital, and reserves as at the end of the accounting period. Important liabilities include capital, reserves and surplus, deposits, borrowings, and other liabilities. Major assets include cash and balances with the RBI, balances with other banks, investments, advances, fixed assets, and other assets. Banking companies prepare the Balance Sheet in the prescribed format under the applicable provisions of the Banking Regulation Act, 1949. It helps users assess the bank’s financial position, liquidity, and solvency.

2. Profit and Loss Account

The Profit and Loss Account shows the financial performance of a banking company during an accounting period. It records major income and expenditure items arising from banking operations. Important income includes interest earned, fees, commissions, income from investments, and other operating income. Major expenses include interest expended, employee costs, administrative expenses, depreciation, provisions, and other operating expenses. The difference between total income and expenses determines the bank’s profit or loss. The Profit and Loss Account helps management and stakeholders evaluate profitability, operating efficiency, and the overall performance of the banking institution.

3. Schedules to Financial Statements

Schedules provide detailed information supporting the figures presented in the Balance Sheet and Profit and Loss Account. Banking companies are required to provide information in prescribed schedules relating to items such as capital, reserves, deposits, borrowings, investments, advances, fixed assets, interest earned, and operating expenses. These schedules make the financial statements more detailed and understandable. They allow users to examine the composition of major financial items rather than relying only on aggregate figures. Proper preparation of schedules also promotes uniformity, transparency, and compliance with applicable banking and regulatory reporting requirements.

4. Notes to Accounts

Notes to Accounts provide additional explanations and disclosures necessary for understanding the financial statements of a banking company. They may include significant accounting policies, commitments, contingent liabilities, related information, asset classification, provisions, and other material matters, depending on applicable requirements. Notes help explain accounting treatments and provide information that cannot be adequately presented within the main financial statements. They are particularly important in banking because banks undertake complex financial transactions and face various financial risks. Proper notes improve transparency and enable users to make a more informed assessment of the bank’s financial position and performance.

5. Capital and Reserves

Capital and reserves represent the financial base of a banking company and are shown as important components of its liabilities and equity. Capital may include paid up share capital and other eligible capital instruments, while reserves may include statutory reserves, securities premium, and other reserves according to applicable requirements. These resources provide protection against losses and support the bank’s operations. The Banking Regulation Act, 1949 and RBI’s prudential framework contain important requirements relating to capital and reserves. Their proper presentation helps stakeholders assess the bank’s financial strength, solvency, and ability to absorb unexpected losses.

6. Deposits

Deposits are a major liability of banking companies and form an important component of their final accounts. They represent funds received from customers that the bank is required to repay according to applicable terms. Deposits may include demand deposits, savings deposits, and term deposits. The financial statements provide information about the amount and nature of deposits according to the prescribed reporting requirements. Accurate classification and presentation of deposits are essential for assessing the bank’s funding structure, liquidity requirements, and interest obligations. Deposits are particularly significant because they constitute a major source of funds for banking operations.

7. Borrowings

Borrowings represent funds obtained by a bank from sources other than customer deposits. They may include borrowings from the Reserve Bank of India, other banks, financial institutions, and other permitted sources. Borrowings are presented as liabilities in the Balance Sheet according to the applicable reporting requirements. Information about borrowings helps users understand the bank’s external funding obligations and liquidity position. Proper disclosure may include the nature and amount of borrowings and related interest obligations. Effective management and accurate reporting of borrowings are important for maintaining liquidity, controlling funding costs, and assessing the bank’s overall financial risk.

8. Investments

Investments constitute a significant component of the assets of banking companies. Banks invest their funds in government securities, bonds, debentures, shares, and other permitted financial instruments. The final accounts disclose investments according to applicable accounting standards and RBI prudential requirements. Information may include the classification, carrying amount, income earned, and relevant valuation details. Proper accounting of investments is essential because they contribute to both the bank’s income and liquidity management. Accurate presentation helps users assess the size, nature, valuation, and performance of the bank’s investment portfolio and understand associated financial risks.

9. Advances

Advances are one of the most important assets of a banking company because lending is a primary banking activity. They include loans, cash credit, overdrafts, and other credit facilities provided to customers. Final accounts present advances according to prescribed classifications and applicable RBI prudential norms. Banks also recognise provisions for identified or expected credit losses according to applicable requirements. Information about advances helps users evaluate the bank’s lending activities, interest earning capacity, and asset quality. Proper classification and disclosure of advances are essential for assessing credit risk and determining the overall financial soundness of the bank.

10. Cash and Balances with Banks

Cash and balances with banks represent highly liquid assets maintained to meet daily payment and withdrawal requirements. This component may include cash in hand, balances with the RBI, and balances with other banks, subject to applicable classification and reporting requirements. Such balances are essential for maintaining liquidity and meeting customer demands. They also support compliance with applicable reserve requirements. In the final accounts, these balances are presented under the appropriate asset category. Their proper reporting helps users assess the bank’s immediate liquidity position and its ability to meet short term financial obligations efficiently.

Formats of Final Accounts of Banking Companies:

Banking companies prepare their final accounts in a prescribed format under the Banking Regulation Act, 1949, along with applicable accounting standards and RBI requirements. The principal components are the Balance Sheet and Profit and Loss Account, supported by schedules.

1. Format of Balance Sheet

Balance Sheet of __________ Bank Ltd.

Balance Sheet as at __________

Capital and Liabilities Schedule Amount (₹) Assets Schedule Amount (₹)
Capital 1 xxx Cash and Balances with RBI 6 xxx
Reserves and Surplus 2 xxx Balances with Banks and Money at Call and Short Notice 7 xxx
Deposits 3 xxx Investments 8 xxx
Borrowings 4 xxx Advances 9 xxx
Other Liabilities and Provisions 5 xxx Fixed Assets 10 xxx
Other Assets 11 xxx
Total xxx Total xxx

2. Format of Profit and Loss Account

Profit and Loss Account of __________ Bank Ltd.
For the year ended __________

Particulars Schedule Amount (₹)
I. Income
Interest Earned 13 xxx
Other Income 14 xxx
Total Income xxx
II. Expenditure
Interest Expended 15 xxx
Operating Expenses 16 xxx
Provisions and Contingencies 17 xxx
Total Expenditure xxx
III. Profit / Loss
Net Profit / Loss for the Year xxx
Profit / Loss brought forward xxx
Total xxx
Appropriations
Transfer to Statutory Reserve xxx
Transfer to Other Reserves xxx
Dividend, if applicable xxx
Balance carried to Balance Sheet xxx

3. Important Schedules

The Balance Sheet and Profit and Loss Account are supported by detailed schedules containing information about capital, reserves, deposits, borrowings, investments, advances, fixed assets, other assets, liabilities, interest earned, other income, interest expended, operating expenses, and provisions.

Management Notes

Bank Accounting, Features, Components, Journal Entries

indiafreenotesby indiafreenotes1

Bank accounting refers to the systematic process of recording, classifying, summarising, and reporting the financial transactions of banking institutions. Banks undertake various specialised activities such as accepting deposits, granting loans and advances, investing funds, discounting bills, and providing financial services. Therefore, their accounting system differs from that of ordinary business organisations. Bank accounting must properly record deposits, advances, interest, investments, provisions, reserves, and other banking transactions. It also involves preparing financial statements in accordance with applicable accounting standards, the Banking Regulation Act, 1949, and regulatory requirements of the Reserve Bank of India (RBI). Proper bank accounting helps assess profitability, liquidity, solvency, asset quality, and overall financial position while ensuring transparency and regulatory compliance.

Features of Bank Accounting:

1. Specialised Nature of Accounting

Bank accounting has a specialised nature because banks perform activities that differ significantly from ordinary trading or manufacturing businesses. Banks primarily deal with deposits, loans, advances, investments, interest, and financial services. Their accounting system must therefore capture large volumes of financial transactions and distinguish between assets, liabilities, income, and expenses arising from banking operations. Special accounting procedures are used for transactions such as non performing assets, provisions, accrued interest, and investments. The specialised nature of bank accounting helps in presenting the financial position and performance of banks accurately and supports effective management and regulatory supervision.

2. Large Volume of Transactions

Banks handle a very large number of transactions every day, including deposits, withdrawals, fund transfers, loan disbursements, repayments, interest calculations, and investment transactions. These transactions are carried out through branches, ATMs, internet banking, mobile banking, and other channels. Bank accounting therefore requires efficient systems capable of recording and processing transactions accurately and promptly. Computerised accounting and integrated banking systems play an important role in maintaining transaction records. Proper controls and reconciliation procedures are necessary to minimise errors and ensure that the large volume of transactions is accurately reflected in the bank’s accounts.

3. Emphasis on Deposits and Advances

A major feature of bank accounting is its focus on deposits and advances. Deposits represent major liabilities because banks receive funds from customers and are required to repay them according to applicable terms. Loans and advances represent major assets because banks lend funds to customers and earn interest. Bank accounting must accurately record deposits, withdrawals, loan disbursements, repayments, interest, overdue amounts, and related provisions. Proper classification and monitoring of these items help determine the bank’s liquidity, profitability, and asset quality. They are therefore central to the preparation of reliable banking financial statements.

4. Accrual of Interest

Banks earn and pay significant amounts of interest on loans, advances, deposits, investments, and other financial instruments. Bank accounting therefore gives considerable importance to the proper recognition of interest income and interest expense. Interest may accrue even when cash has not yet been received or paid, subject to applicable accounting and regulatory requirements. In particular, interest recognition on non performing assets is subject to specific prudential norms. Proper calculation and recognition of interest ensures that income and expenses are reported in the correct accounting period and prevents overstatement of banking profits.

5. Classification of Assets

Bank accounting requires proper classification of assets, particularly loans and advances. Banking assets are assessed according to their performance and repayment status under applicable RBI prudential norms. Loans may be classified into categories such as standard, substandard, doubtful, and loss assets according to the applicable regulatory framework. This classification helps banks identify potential credit losses and determine appropriate provisioning requirements. Proper classification is important because the quality of advances directly affects the bank’s profitability, capital position, and financial stability. It also provides stakeholders with information about the quality and risk associated with the bank’s loan portfolio.

6. Provisioning for Bad and Doubtful Debts

Banks are exposed to the risk that borrowers may fail to repay loans and advances. Therefore, provisioning is an important feature of bank accounting. Banks are required to create appropriate provisions for expected or identified losses according to applicable accounting and RBI requirements. Provisioning reduces the possibility of overstating assets and profits and provides a financial cushion against potential credit losses. The amount of provision depends on factors such as the classification and quality of the advance. Proper provisioning helps present a more realistic financial position and strengthens the bank’s ability to absorb future losses.

7. Investment Accounting

Banks maintain significant investment portfolios consisting of government securities, bonds, shares, and other eligible financial instruments. Bank accounting therefore includes specialised procedures for recording, classifying, valuing, and disclosing investments. Banks must follow applicable RBI prudential norms and accounting requirements regarding their investment portfolio. Interest, dividends, premium, discount, and gains or losses on disposal must be appropriately accounted for. Proper investment accounting helps banks manage liquidity, earn returns on surplus funds, and comply with regulatory requirements. It also provides users with reliable information regarding the nature and value of the bank’s investments.

8. Regulatory Compliance

Bank accounting is closely governed by laws, accounting standards, and regulatory requirements. Banks must comply with provisions of the Banking Regulation Act, 1949, applicable accounting standards or Ind AS, RBI directions, and other relevant regulations. These requirements cover financial statements, capital, reserves, asset classification, provisioning, investments, disclosures, and other banking activities. Regulatory compliance promotes consistency and transparency in financial reporting. It also enables regulators to monitor the financial health of banks and take corrective measures when required. Therefore, bank accounting involves considerably greater regulatory oversight than many ordinary business organisations.

9. Preparation of Prescribed Financial Statements

Banks are required to prepare financial statements in prescribed formats under applicable banking laws and regulatory requirements. The financial statements generally include the Balance Sheet, Profit and Loss Account, and relevant schedules and disclosures. Banking financial statements provide detailed information about deposits, borrowings, advances, investments, interest income, operating expenses, provisions, and other important items. The prescribed format promotes uniformity and facilitates comparison between different banks. It also helps shareholders, depositors, regulators, and other users understand the financial position and performance of the banking institution.

10. High Importance of Internal Control

Strong internal control systems are essential in bank accounting because banks handle large amounts of public money and process numerous transactions. Internal controls include proper authorisation, segregation of duties, reconciliation, verification, access controls, and regular audits. These measures help prevent fraud, errors, unauthorised transactions, and misappropriation of funds. Banks also use automated systems and monitoring mechanisms to strengthen accounting controls. Effective internal control improves the reliability of accounting records and protects the interests of depositors, shareholders, and other stakeholders. It is therefore a fundamental feature of sound bank accounting.

Components of Bank Accounting:

1. Deposits

Deposits are one of the most important components of bank accounting because they represent funds received from customers and constitute major liabilities of a bank. Common types include current deposits, savings deposits, and fixed or term deposits. Bank accounting records deposits when customers place funds with the bank and records withdrawals when funds are withdrawn. Interest payable on eligible deposits is also appropriately accounted for. Accurate recording of deposits is essential for determining the bank’s total liabilities, liquidity position, and interest expenses. Proper classification and disclosure of deposits help users understand the bank’s funding structure.

2. Loans and Advances

Loans and advances constitute a major portion of a bank’s assets and represent amounts lent to customers for various purposes. They include term loans, cash credit, overdrafts, and other credit facilities. Bank accounting records the amount disbursed, repayments, interest, overdue amounts, and applicable provisions. Loans are classified according to their performance under relevant RBI prudential norms. Proper accounting helps determine interest income, asset quality, and potential credit losses. Since lending is a primary banking activity, accurate recording and monitoring of loans and advances are essential for assessing profitability and financial stability.

3. Investments

Investments form an important component of bank accounting because banks invest surplus funds in various financial instruments. These may include government securities, bonds, debentures, shares, and other permitted securities. Banks record the purchase, sale, interest, dividend, valuation, and related transactions associated with investments. The accounting treatment is governed by applicable accounting standards and RBI regulations. Proper classification and valuation of investments help determine their carrying amounts and the income or losses arising from them. Investment accounting also supports liquidity management, regulatory compliance, and efficient utilisation of funds available with the bank.

4. Interest Income

Interest income is a major source of revenue for banks and primarily arises from loans, advances, investments, and other interest bearing assets. Bank accounting requires proper calculation and recognition of interest according to applicable accounting and regulatory requirements. Interest may accrue over time even when cash has not yet been received, subject to the rules governing recognition, particularly for non performing assets. Accurate recording of interest income is essential for determining the bank’s profitability. It also helps distinguish between interest earned, interest received, and amounts that may no longer qualify for income recognition under prudential norms.

5. Interest Expense

Interest expense represents the cost incurred by banks for obtaining funds from depositors and other sources. Major sources include savings deposits, fixed deposits, borrowings, and other interest bearing liabilities. Banks calculate and recognise interest payable according to the applicable terms and accounting requirements. Interest expense is an important component of the bank’s total operating cost and directly affects its profitability. Proper accounting ensures that interest liabilities are recognised in the appropriate accounting period. The difference between interest earned on assets and interest paid on liabilities is an important element in assessing the bank’s core banking performance.

6. Cash and Bank Balances

Cash and bank balances represent highly liquid resources maintained by a bank to meet daily payment and withdrawal requirements. They include cash in hand, balances maintained with the Reserve Bank of India, and balances with other banks, subject to applicable classification and reporting requirements. These balances are essential for maintaining liquidity and meeting customer demands. Bank accounting records receipts, withdrawals, transfers, and other movements in cash and bank balances. Proper reconciliation and monitoring are necessary to ensure accuracy. Adequate liquid balances also support compliance with applicable reserve and liquidity requirements.

7. Borrowings

Borrowings represent funds obtained by banks from sources other than customer deposits. These may include borrowings from the Reserve Bank of India, other banks, financial institutions, and money markets, depending on applicable regulations. Borrowings provide additional liquidity and help banks meet temporary funding requirements or support lending activities. Bank accounting records the amount borrowed, interest payable, repayment, and outstanding balance. Proper classification and disclosure of borrowings are necessary for understanding the bank’s financial obligations. Monitoring borrowing levels also helps management maintain appropriate liquidity and control funding costs.

8. Provisions and Reserves

Provisions and reserves are important components of bank accounting because they strengthen the financial position of banks and provide protection against potential losses. Provisions may be created for bad and doubtful debts, investment losses, taxation, and other identified or expected obligations, according to applicable requirements. Reserves may include statutory and other eligible reserves maintained by the bank. Proper provisioning prevents assets and profits from being overstated. Adequate reserves strengthen the bank’s capacity to absorb losses and support financial stability. Accounting for provisions and reserves must comply with applicable RBI and accounting requirements.

9. Capital

Bank capital represents the financial resources contributed by owners and retained by the bank to support its operations and absorb losses. It includes paid up capital, reserves, and other eligible capital instruments, depending on the applicable regulatory framework. Bank accounting records changes in capital arising from issue of shares, retained earnings, and other permitted transactions. Adequate capital is essential for maintaining solvency and meeting regulatory requirements. Capital also provides protection to depositors and creditors by acting as a financial cushion against unexpected losses. Banks must maintain capital according to applicable RBI prudential requirements.

10. Profit and Loss Account

The Profit and Loss Account summarises the income and expenses of a bank during an accounting period and helps determine its profitability. Major income items include interest earned, fees, commissions, and other operating income, while expenses include interest paid, employee costs, administrative expenses, depreciation, and provisions. Proper classification of income and expenses is essential for calculating the bank’s net profit accurately. The Profit and Loss Account provides important information to management, shareholders, regulators, and other stakeholders regarding financial performance and helps assess the efficiency and profitability of banking operations.

Journal Entries of Bank Accounting:

The following are common journal entries used in bank accounting. Actual entries may vary depending on the nature of the transaction and applicable banking rules.

No. Transaction Journal Entry
1 Cash deposited by customer Cash A/c Dr.

To Customer Deposit A/c
2 Cash withdrawn by customer Customer Deposit A/c Dr.

To Cash A/c
3 Loan granted to customer Loan and Advances A/c Dr.

To Customer Deposit / Cash A/c
4 Repayment of loan Cash / Bank A/c Dr.

To Loan and Advances A/c
5 Interest received on loan Cash / Bank A/c Dr.

To Interest Income A/c
6 Interest accrued on advances Interest Accrued A/c Dr.

To Interest Income A/c
7 Interest paid on deposits Interest Expense A/c Dr.

To Cash / Customer Deposit A/c
8 Investment purchased Investment A/c Dr.

To Cash / Bank A/c
9 Investment sold at profit Cash / Bank A/c Dr.

To Investment A/c

To Profit on Sale of Investment A/c
10 Investment sold at loss Cash / Bank A/c Dr.

Loss on Sale of Investment A/c Dr.

To Investment A/c
11 Dividend received Cash / Bank A/c Dr.

To Dividend Income A/c
12 Commission received Cash / Bank A/c Dr.

To Commission Income A/c
13

Bank charges received from customer

 Customer A/c Dr.

To Commission / Bank Charges Income A/c
14 Salary paid Salary A/c Dr.

To Cash / Bank A/c
15 Rent paid Rent A/c Dr.

To Cash / Bank A/c
16 Provision for doubtful debts created Profit & Loss A/c Dr.

To Provision for Doubtful Debts A/c
17 Bad debt written off Provision for Doubtful Debts A/c Dr.

To Loan and Advances A/c
18 Depreciation charged Depreciation A/c Dr.

To Accumulated Depreciation A/c
19 Borrowing obtained by bank Cash / Bank A/c Dr.

To Borrowings A/c
20 Repayment of borrowing Borrowings A/c Dr.

To Cash / Bank A/c
21 Interest paid on borrowing Interest Expense A/c Dr.

To Cash / Bank A/c
22

Transfer of Profit to reserve

 Profit & Loss Appropriation A/c Dr.

To Reserve Fund A/c
23

Income transferred to Profit & Loss Account

 Income A/c Dr.

To Profit & Loss A/c
24

Expenses transferred to Profit & Loss Account

 Profit & Loss A/c Dr.

To Expense A/c
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