Business Principles, Tools, and Techniques in Participating in Various Types...
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Adjustment in final acc
1. There are many adjustment because earlier we have not passed any journal entry , so at the time of making final
account we have to adjust them .
Name of items Adjustment entry Effect on trading and Effect on balance sheet
profit and loss account
1. Closing stock Closing stock Closing stock will write in It will show as asset in the
account dr. xxx the credit side of trading final account
To trading account account
xxx
2. outstanding Expenses account dr. Outstanding expenses will It will be the current liability
expenses or expenses xxx add in expenses . if it is so it will go to the liability
payable or expenses To outstanding exp. direct it will go to trading side of balance sheet.
due but not paid xxx accountโs debit side , if it
is indirect nature then it
will go to the debit side of
profit and loss account
3. advance expenses Advance expenses It will deduct from It will be the current asset so
a/c dr. xxx respective expenses paid . it will go to assets side of
To expenses account balance sheet
xxx
4. income receivable Outstanding income It will add in the income It will show as asset in the
account dr. xxx and go to credit side of assets side of balance sheet
To income account profit and loss account
xxx
5. income received in Income account dr. It will deduct from the It will shown as liability in the
advance xxx income received liabilities side of balance
To advance income sheet
account xxx
6 Goods use for Drawing account dr. It will deduct from It will deduct from capital in
personal use xxx purchase in the debit side the liabilities side of balance
To purchase account of trading account sheet
= purchase โdrawing in =capital- drawing in goods
goods
7. Destroyed of loss by fire or It will shown in credit side It will not go to balance sheet
goods accident account Dr. of trading account
xxx And also in profit and loss
To trading accountโs debit side
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 It will go to the debit side It will deduct from fixed asset
dr. xxx of profit and loss account . Because it decrease the value
To respective asset of asset
account xxxx =fixed asset - depreciation
9. provisional for If you have make Net value of provision for Deduct from debtor
doubtful debts any provision for doubtful debt account = debtor โ new bad debts โ
doubt ful debts the transfer to profit and loss this year provision or closing
its journal entry will accountโs debit side balance of provision for bad
passed =total bad debt + closing debts
Provision for balance or provision of
doubtful debt doubtful debt or this year
account dr. xxx provision - opening
To Bad debts balance of provision for
account xxx doubtful debts
( New bad debts
which is not shown
in trial balance will
transfer to provision
for doubtful debt
account )
10. Commission to Commission account It will shown in the debit It will shown as liability
manager dr. xxx side of profit and loss
To outstanding account as o/s commission
2. commission to manager
If it charge on the amount
after charging such
commission then we will
calculate
= profit before
commission X Rate/
100+rate