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    Financial Statements With Adjustments

    Uploaded by

    Chirag
    The document discusses various adjustments that may be needed for financial statements, including closing stock, outstanding wages, prepaid insurance, accrued income, unearned income, and deferred revenue expenditure. Closing stock is adjusted from market value to cost. Outstanding wages, prepaid insurance, accrued income, and unearned income require adjusting income statement accounts. Deferred revenue expenditure spreads an expenditure over multiple years, with a portion shown as an asset on the balance sheet.

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    Financial Statements With Adjustments

    Uploaded by

    Chirag
    171 views13 pages
    The document discusses various adjustments that may be needed for financial statements, including closing stock, outstanding wages, prepaid insurance, accrued income, unearned income, and deferred revenue expenditure. Closing stock is adjusted from market value to cost. Outstanding wages, prepaid insurance, accrued income, and unearned income require adjusting income statement accounts. Deferred revenue expenditure spreads an expenditure over multiple years, with a portion shown as an asset on the balance sheet.

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    abhinav

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    The document discusses various adjustments that may be needed for financial statements, including closing stock, outstanding wages, prepaid insurance, accrued income, unearned income, and deferred revenue expenditure. Closing stock is adjusted from market value to cost. Outstanding wages, prepaid insurance, accrued income, and unearned income require adjusting income statement accounts. Deferred revenue expenditure spreads an expenditure over multiple years, with a portion shown as an asset on the balance sheet.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    171 views13 pages

    Financial Statements With Adjustments

    Uploaded by

    Chirag
    The document discusses various adjustments that may be needed for financial statements, including closing stock, outstanding wages, prepaid insurance, accrued income, unearned income, and deferred revenue expenditure. Closing stock is adjusted from market value to cost. Outstanding wages, prepaid insurance, accrued income, and unearned income require adjusting income statement accounts. Deferred revenue expenditure spreads an expenditure over multiple years, with a portion shown as an asset on the balance sheet.

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    Financial statements with

    adjustments
    CLOSING
    STOCK
    Adjustment
    Stock of goods at the end of the year is 24,000(market
    value 30,000)

    Trading account
    Particular Amount Particular Amount
    By closing stock 10000

    BALANCE SHEET
    LIABILITIES Amount Assets Amount
    Closing stock 10000
    OUTSTANDING
    Name of account
    EXPENSES
    EXAMPLE: Extract from TRIAL BALANCE
    L.F. DEBIT CREDIT
    WAGES 2,20,000

    Adjustment
    OUTSTANDING WAGES AMOUNT TO 20,000/-

    Trading account
    Particular Amount Particular Amount
    To wages 2,20,000
    +outstanding wages 20,000 2,40,000

    Balance sheet
    Liability Amount Assets Amount
    Outstanding wages 20,000
    Prepaid EXPENSES
    EXAMPLE: Extract from TRIAL BALANCE
    Name of account L.F. DEBIT CREDIT
    Insurance A/C 20,000

    Adjustment
    PREPAID INSURANCE AMOUNT TO 5000/-

    Profit and loss account


    Particular Amount Particular Amount
    To insurance 20,000
    -insurance premium 5000 25,000

    Balance sheet
    Liabilities Amount Assets Amount
    Prepaid Insurance 5000
    ACCURED
    Name of account
    INCOME
    EXAMPLE: Extract from TRIAL BALANCE
    L.F. DEBIT CREDIT
    Commission received 15,000

    Adjustment
    Commission earned but not received 3,000/-

    Profit and loss account


    Particular Amount Particular Amount
    By commission 15000
    +accrued commission 3000 18000

    Balance sheet
    Liabilities Amount Assets Amount
    Accrued income 3000
    UNEARNED
    Name of account
    INCOME
    EXAMPLE: Extract from TRIAL BALANCE
    L.F. DEBIT CREDIT
    Rent 39,000

    Adjustment
    Rent received but not earned 3,000/-

    Profit and loss account


    Particular Amount Particular Amount
    By rent 39000
    -unearned rent 3000 36000

    Balance sheet
    Liabilities Amount Assets Amount
    Unearned income 3000
    DEFERRED REVENUE EXPENDITURE
     These are those expenditure which are revenue in nature but the benefits of which
    are likely to be derived over a number of years.

    EXAMPLE:A company invested a huge amount of 2,00,000/- to introduce a


    new product in market and it is estimated that the benefit last for 4 years.
    EXAMPLE: Extract from TRIAL BALANCE
    Name of account L.F. DEBIT CREDIT
    Advertising 2,00,000

    Adjustment
     ¼ of the advertising expense belong to this year.
    Profit and loss account
    Particular Amount Particular Amount
    TO ADVERTISING EXPENSES(1/4 of 2,00,000) 50,000

    Balance sheet
    Liabilities Amount Assets Amount
    Advertising expenses 1,50,000

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