Final Accounts prepared under Double Account System consist of:- 1. Capital Account, i.e. Receipts and Expenditure on Capital A/c 2. General Balance Sheet 3. Revenue Account 4. Net Revenue Account.
The Balance Sheet, in case of Double Account System, is split into two parts:
(1) Capital Account, i.e., Receipts and Expenditure on Capital Account and
(2) General Balance Sheet.
(1) Receipts and Expenditure on Capital Account (CAPITAL ACCOUNT):
It is also known as Capital Account. The aim of preparing this account is to give the general public full and complete information about raising and utilisation of fixed capital. It has four columns on left hand side and four columns on the right hand side.
That is, it has three amount columns in each side. It is prepared in columnar form. On the receipt side (credit side) first amount column indicates the receipts up to the time of commencement of the accounting period, second amount column gives the receipts during the year and the third amount column is for total receipts up to the end of the current year.
On the expenditure side (debit side), first amount column indicates the expenditure up to the commencement of the current year, second amount column gives details of the money spent during the year and the third column is for the total expenditure up to the end of the current year.
The balance of the Capital Account is carried down and shown as a separate item in the General Balance Sheet. In case of Electricity Supply Companies, the total capital receipts and the total expenditure are shown in the balance sheet.
If the total of credit side of Capital Account is more than the total of debit side of this account, balance is transferred to the liability side of General Balance Sheet; and when the total of debit side of this account is more than the total of credit side of this account, the balance is transferred to the asset side of General Balance Sheet.
Following is the specimen form of this account:
(2) General Balance Sheet:
Floating assets and floating liabilities are recorded in the General Balance Sheet. In all cases, except electricity supply companies, balance of Capital Account is transferred to General Balance Sheet. All other rules of preparation of General Balance Sheet are the same as those of Balance Sheet of a trading concern.
Given below is the form of General Balance Sheet:
(3) Revenue Account:
It is in the nature of Profit and Loss Account. Expenses are shown on the debit side and incomes are shown on the credit side. The balance of Revenue Account is transferred to Net Revenue Account.
A specimen form of Revenue Account is given below:
(4) Net Revenue Account:
This Account is similar to the ordinary Profit and Loss Appropriation Account. But in addition to the usual appropriation items, interest on loans, debentures, etc., is also debited to Net Revenue Account. And, interest received, if any, will be credited. In the case of Railways, rent payable on long leases is also treated as an appropriation item. In the case of Railways rent on leasehold is also debited to this account.