Application of Computers in Accounting — Account STD 11 Commerce — Question

Trial Balance has a number of accounts for expenses, income, assets and liabilities. All the account heads cannot be shown in the final accounts as they will not remain understandable. Account heads are grouped in various sub-heads according to their nature and the final amount in the subgroup is shown in the final accounts. For example, salary, wages, staff welfare and other similar account heads may be grouped under Establishment Expenses or Employee Cost and the final amount be shown in the Profit and Loss Account (Statement of Profit and Loss, in the case of companies). In fact, the process of grouping is carried out along with the preparation of chart of accounts since the two stages are inter-related.