Trial Balance :  The statement of balances of ledger accounts is known as “Trial Balance”. The Trial balance is a test of arithmetical accuracy in transaction.
Bank Reconciliation :  The reconciliation of the  bank balance in trader records and the pass book balance is very important. 
The reasons for the disagreement between  Bank balance in trader records and balance in  the statement  received from bank.
Cheque issued but not presented
Cheque deposited but not collected
Direct depost by customers
Payments by bank as per standing instruction
Interest  and dividends collected
Cheque dishonored
Interest on overdraft and bank charges
Posting  or other mistakes

Overdraft:  Some times, the bank permits to some of their customer having current account  to withdraw more their deposits up to a particular limit.   When the  trader has withdrawn from the bank more than his deposits, his balance is called as ‘Overdraft’

Petty Cash :  A business has to make various very small payments such as postal charges,  Tea Expenses, Paper clips etc.   The person who is entrusted of with the task of small payments and keeping records of them is known as Petty Cashier.   He is a subordinate of main cashier.  
The cashier gives him an advance, which is fixed by taking into consideration the amount  needed for the period.  The petty cashier is not allowed to  make payments above a particular limit.    The petty cash account gives an idea about the extent of small payments incurred in a particular period.

Outstanding expenses: Outstanding expenses are the expenses already incurred for the period, but the payments are not yet made. They are adjusted by debiting the particular expenses account and crediting the outstanding expenses account.   Expenses account Debit and Credit the Outstanding Expenses.

Prepaid Expenses:   Expenses paid during the year for the benefit of the coming year., are known as ‘Prepaid expenses’

If a particular expense includes payment for the next period, such payment should be adjusted before transferring  it  to the Profit and Loss Account.

Prepaid  Expense A/c  Dr. 
To Expense

Income Received in Advance :  The amount received for the services to be rendered by the business  in the next period is known as  ‘Income Received in  Advance’ or Prepaid income.  Hence the portion  of  this income applicable for the next period must be carried forward.  The adjusting entry is
Income A/c  Dr.
To Income Received in Advance A/c

Bad Debts:  The irrecoverable portion of the Account receivables is called as ‘Bad Debits” . It is a business loss and hence it is to be deducted from Accounts Receivable and must be debited in the Bad Debits Account.
Bad Debt A/c  Dr
To  Account Receivables

Closing Stock :  The unsold stock with the business at the end, is an asset as on that date, as well as an income for the period. Since, we debit the Purchase Account when goods are bought and Credit the Sales Account when they are sold, there is no entry in the books for the stock of goods at the end.  The stock of goods is brought into account by debiting stock account  and crediting  to Trading Account.

Stock  Account  Dr   (Balance Sheet side)
To  Closing Stock    (P& L side)

Depreciation on Fixed Assets  : The permanent decrease in the value of fixed assets because of their use in the business  is called ‘Depreciation’.  The value lost on the fixed asset is a business expense.

Depreciation A/c Dr
To Asset

Trading and profit and Loss Account : Trading and Profit and Loss Account is a statement of  Income(revenues) and expenses of a business for a period.  It reveals the end results of the business activities of the period. The result may be either profit or loss.  Profit or Loss  for the period is ascertained by matching the revenues and expenses of the period.  This statement is also called Income 

Gross profit the excess of sales over the cost of goods sold.  If the cost of sales is more than the sales, the difference is gross loss. 

Cost of Goods Sold = (Opening Stock + Purchases +Direct Expenses)  –  Closing Stock
Gross Profit  =  Sales – (Opening Stock + Purchases + Direct Expenses ) – Closing Stock
I.e  Cost of Goods sold +  Gross profit =Sales of Cost of Goods sold  –  Gross Loss = Sales

Direct  Expenses  (Other cost)  : The direct expenses are the expenses very closely connected with the purchases and manufacture of goods.  Such as  Wages, Freight Charges, Packing cost,  Factory expenses etc.
Balance Sheet:  The statement of Assets and Liabilities of a business prepared as at a particulare date, in the proper format so as to show the exact financial condition on that date is known as ‘Balance Sheet.’  

As the Balance sheet reveals the financial positions, it is also known as ‘Financial Statement’