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FINAL ACCOUNTS ADJUSTMENTS

1. Outstanding Expense/ Yet to be Paid/ Expense Due:

Add the amount with respective item and it will appear on the Liability side of

the Balance Sheet. (Add & Liability)

2. Prepaid Expense/ Paid in advance/ Unexpired Expenditure:

Deduct the prepaid amount with the respective amount and it will appear on

the Asset side of the Balance Sheet. (Deduct & Assets)

3. Accrued Income/ Yet to be received:

Add the amount with the respective amount and it will appear on the Assets

side of the Balance Sheet. (Add & Assets)

4. Income received in advance:

Deduct the amount with the respective amount and it will appear on theLiability side of the Balance Sheet. (Add & Liability)

5. Depreciation:

Calculate the depreciation amount and it will appear on the Profit & loss A/c

Debit side and it will be deducted from the concerned assets.

6. Interest on capital:

Calculate the interest on capital and write it on the Profit & Loss A/c Debit side.

Again this amount should be added with capital in Liability side.

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7. Interest on Drawings:

Calculate the interest on drawings and write it on the Profit & Loss A/c Credit

side. Again this amount should be deducted from capital along with drawings.

8. Interest on Loan/ Overdraft:

Calculate the amount and write it in the Profit & Loss A/c Debit side. Again this

amount will be added with loan/overdraft in the Liability side of the Balance

Sheet.

9. Interest on Investment/ Fixed Deposit:

Calculate the accrued interest and write it on the Profit & Loss A/c Credit side.

Again this will be added with investment/fixed deposit in the Assets side of the

Balance Sheet.

10. Bad Debt:

(A) If the Bad debt appears only in the question, then it will appear on the Profit

& Loss A/c Debit side.

(B) If the Bad debt appears only in the adjustment, then it will appear on the

Profit & Loss A/c Debit side and again it will be deducted from Sundry debtors in

Assets side.

(C) If the Bad debt appears in two places such as Question as well as

Adjustment, then both amount should be added and written on the Profit & Loss

A/c Debit side and Adjustment Bad debt amount will be deducted from Sundry

debtors in the Assets side.

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11. Doubtful Debt/ Bad Debt Provision/ Bad Debt Reserve/ Bad and

Doubtful Debt:

(A) It the Doubtful debt appears only in the Question, then it will appear on theProfit & Loss A/c Credit side. (Old Provision)

(B) If the Doubtful debt appears only in the Adjustment, then it will appear on

the Profit & Loss A/c Debit side and again it will be deducted from the Sundry

debtors. (New Provision)

(C) If the doubtful debt appears in both the Question as well as in the

Adjustment, then the Question amount is considered as Old Provision and the

Adjustment as New Provision.

If the New provision is greater than that of (New Old), write it on the

Profit & Loss A/c Debit side and New provision is deducted from debtors on the

Balance Sheet Assets side.

If the Old provision is greater than that of (Old New), write it on the

Profit & Loss A/c Credit side and New provision is deducted from debtors on the

Balance Sheet Assets side.

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Discount on Debtors:

(A) It the Discount on Debtors appears only in the Question, then it will appear

on the Profit & Loss A/c Credit side. (Old Provision)

(B) If the Discount on Debtors appears only in the Adjustment, then it will

appear on the Profit & Loss A/c Debit side and again it will be deducted from the

Sundry debtors. (New Provision)

(C) If the Discount on Debtors appears in both the Question as well as in the

Adjustment, then the Question amount is considered as Old Provision and theAdjustment as New Provision.

If the New provision is greater than that of (New Old), write it

on the Profit & Loss A/c Debit side and New provision is deducted from debtors on

the Balance Sheet Assets side.

If the Old provision is greater than that of (Old

New), write it on the

Profit & Loss A/c Credit side and New provision is deducted from debtors on the

Balance Sheet Assets side.

Discount on Creditors:

(A) If the Discount on Creditor appears only in the Question, then it will appearin the Profit & Loss A/c Debit side.

(B) If the Discount on Creditor appears only in the Adjustment, then it will

appear in the Profit & Loss A/c Credit side and it will be deducted from the

Creditors in the Balance Sheet Liabilities side.