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Adjustments at A Glance

This document provides a summary of common accounting adjustments and their impact. It lists 11 types of adjustments including outstanding expenses, prepaid expenses, accrued income, unearned income, depreciation, interest on capital, interest on drawings, provision for bad debts, provision for discount on debtors, provision for discount on creditors, and closing stock. For each adjustment, it identifies the alternative terms, adjusting entry, effect on trading/profit and loss account, and effect on balance sheet. The purpose is to provide an at-a-glance reference for how these common adjustments affect the financial statements.

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Muhammad Umar
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362 views1 page

Adjustments at A Glance

This document provides a summary of common accounting adjustments and their impact. It lists 11 types of adjustments including outstanding expenses, prepaid expenses, accrued income, unearned income, depreciation, interest on capital, interest on drawings, provision for bad debts, provision for discount on debtors, provision for discount on creditors, and closing stock. For each adjustment, it identifies the alternative terms, adjusting entry, effect on trading/profit and loss account, and effect on balance sheet. The purpose is to provide an at-a-glance reference for how these common adjustments affect the financial statements.

Uploaded by

Muhammad Umar
Copyright
© © All Rights Reserved
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
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Al-Hamd College

ADJUSTMENTS AT A GLANCE
Effect on Effect on
S.No. Adjustment Alternative Adjusting Entry Trading or Balance
P&L A/c Sheet
Outstanding/due/unpaid/ Added in related Liabilities
Outstanding accrued/arrear/ Expense item or the Dr. side of the
1 Expenses still payable/not yet paid/ To Outstanding Expenses side of Trading or Balance
owing P&L A/c Sheet
Deducted in Assets
Prepaid/unexpired/ Prepaid Expenses related item or side of the
Prepaid
2 Expenses
paid in advance/carry To Expense the Dr. side of Balance
forward to the next year Trading or P&L Sheet
A/c
Added in related Assets
Accrued Accrued Income item or the Cr. side of the
3 Income
Accrued/Receivable
To Income side of Trading or Balance
P&L A/c Sheet
Deducted in Liabilities
Income related item or side of the
Unearned Unearned/Received in
4 Income Advance/Unexpired
To Unearned Income the Cr. side of Balance
Trading or P&L Sheet
A/c
Deduction
Deprecation out of
Decrease or reduce in Dr. Profit & Loss
5 Depreciation
value/write off
To Asset
A/c
concerned
asset in the
asset side
Interest on capital Added in the
Interest on Dr. Profit & Loss
6 capital
------------ To capital
A/c
capital in the
Liability side
Deduction
Interest on Capital/drawings Cr. Profit & Loss out of the
7 drawing
------------
To Interest on drawings A/c capital in the
liability side
Deduction
Provision for Reserve/allowance for Profit & Loss/Bad debts Dr. Profit & Loss out of debtors
8 bad debts bad debts To provision for bad debts A/c in the asset
side
Deduction
Provision for Profit & Loss/discount on out of debtors
Reserve/allowance for Dr. Profit & Loss
9 discount on
discount
debtors
A/c
in the asset
debtors To provision for side
discount on debtors
Deduction
Provision for Provision for discount on out of the
Reserve/allowance for Cr. Profit & Loss
10 discount on
discount
creditors
A/c
creditors in
creditors To Profit & Loss/ the liability
discount on debtors side
Assets
Closing Stock side of the
11 Closing Stock Stock/Inventory
To Trading Account
Cr. Trading A/c
Balance
Sheet

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