Scribd
Upload
63 views2 pages

Balance Sheet Adjustments

These accounting adjustments affect the trading and profit and loss account and balance sheet in the following ways: 1. Closing stock, outstanding expenses, advance expenses, income receivable, and goods used for personal use adjust trading, expenses, income, and purchases accounts. 2. Outstanding expenses, income received in advance, and commission to manager appear as current assets or liabilities on the balance sheet. 3. Destroyed goods, depreciation, and provision for doubtful debts adjust asset values and expenses on the profit and loss account and balance sheet.

Uploaded by

Vijay Dangwani
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
63 views2 pages

Balance Sheet Adjustments

These accounting adjustments affect the trading and profit and loss account and balance sheet in the following ways: 1. Closing stock, outstanding expenses, advance expenses, income receivable, and goods used for personal use adjust trading, expenses, income, and purchases accounts. 2. Outstanding expenses, income received in advance, and commission to manager appear as current assets or liabilities on the balance sheet. 3. Destroyed goods, depreciation, and provision for doubtful debts adjust asset values and expenses on the profit and loss account and balance sheet.

Uploaded by

Vijay Dangwani
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 2

Name of items Adjustment entry Effect on trading and profit and loss account Effect on balance sheet

1. Closing stock Closing stock account dr. xxx Closing stock will write in the credit side of trading It will show as asset in the final account
account
To trading account xxx
2. outstanding expenses Expenses account dr. xxx Outstanding expenses will add in expenses. If it is It will be the current liability so it will go to
or expenses payable or direct it will go to trading account’s debit side , if it the liability side of balance sheet.
expenses due but not To outstanding exp. xxx is indirect nature then it will go to the debit side of
paid profit and loss account
3. advance expenses Advance expenses a/c dr. xxx It will deduct from respective expenses paid . It will be the current asset so it will go to
assets side of balance sheet
To expenses account xxx
4. income receivable Outstanding income account dr. It will add in the income and go to credit side of It will show as asset in the assets side of
xxx profit and loss account balance sheet

To income account xxx


5. income received in Income account dr. xxx It will deduct from the income received It will shown as liability in the liabilities side
advance of balance sheet
To advance income account xxx
6 Goods use for Drawing account dr. xxx It will deduct from purchase in the debit side of It will deduct from capital in the liabilities
personal use trading account side of balance sheet
To purchase account
= purchase –drawing in goods =capital- drawing in goods
7. Destroyed of goods loss by fire or accident account It will shown in credit side of trading account It will not go to balance sheet
Dr. xxx
And also in profit and loss account’s debit side
To trading

If there is no insurance

It will also go to profit and loss


account

Profit and loss account dr. xxx


To loss by fire / accident
8. Depreciation Depreciation account dr. xxx It will go to the debit side of profit and loss account It will deduct from fixed asset . Because it
decrease the value of asset
To respective asset account
xxxx =fixed asset - depreciation
9. provisional for If you have make any provision Net value of provision for doubtful debt account Deduct from debtor
doubtful debts for doubt ful debts the its transfer to profit and loss account’s debit side
journal entry will passed = debtor – new bad debts – this year
=total bad debt + closing balance or provision of provision or closing balance of provision for
Provision for doubtful debt doubtful debt or this year provision - opening bad debts
account dr. xxx balance of provision for doubtful debts

To Bad debts account xxx

( New bad debts which is not


shown in trial balance will
transfer to provision for
doubtful debt account )
10. Commission to Commission account dr. xxx It will shown in the debit side of profit and loss It will shown as liability
manager account as o/s commission to manager
To outstanding commission
If it charge on the amount after charging such
commission then we will calculate

= profit before commission X Rate/ 100+rate

You might also like

pFad - Phonifier reborn

Pfad - The Proxy pFad of © 2024 Garber Painting. All rights reserved.

Note: This service is not intended for secure transactions such as banking, social media, email, or purchasing. Use at your own risk. We assume no liability whatsoever for broken pages.


Alternative Proxies:

Alternative Proxy

pFad Proxy

pFad v3 Proxy

pFad v4 Proxy