Advertisement

What is the purpose of making adjustments in the final accounts?

                                                                                                   
Ans – MEANING
          There are certain incomes and expenditures which are not recorded even at the closing date of accounts. While there are certain Income & Expenditures which are recorded but they relate to next accounting period.
          So, in order to prepare the final accounts for a particular period these adjustments are to be adjusted since they affect Profit or Loss, Assets & Liabilities of the business. Some important items which need due adjustments at the time of preparing final accounts are (a) Closing Stock; (b) Outstanding Expenses; (c) Prepaid Expenses; (d) Accrued Income; (e) Income received in advance; (f) Depreciation; (g) Provision for bad debts; (h) Provision for discount on debtors etc. In accounting terminology the effect of such transactions in Final Accounts are known as Adjustments.

PURPOSE OF MAKING ADJUSTMENTS IN FINAL ACCOUNTS

1. Revenue Recognition Principle: Recognition Principle of Accounting all the revenues should be recognised in the period in which the sale is deemed to have occurred. Thus, any income which relates to a particular year should be recognised in that year whether received or not received. Whereas, any income which does not relates to the particular year should be excluded if taken into consideration.

2. Matching Principle: According to matching principle, all the expenses should be recognised in the same period as associated to revenues. It means that expenses recognition is tied to Revenue Recognition. In other words we can say that expense follows the Revenue.

3. Accrual Concept: The most important concept of accounting is the accrual concept which states that in preparing final accounts Income & Expenses related to the accounting year should be considered.
          Thus, in order to prepare the Trading and Profit & Loss A/c on accrual basis the following are followed:
(a) Any expenditure which has been paid but relates to the succeeding period is deduced.
(b) Any expenditure which relates to current period whether paid or not added.
(c) Income or Receipts which relates to succeeding period but received is deducted. 
(d) Income or receipt which relates to current accounting period whether received or not is added. 

PDF FILE TO YOUR EMAIL IMMEDIATELY PURCHASE NOTES & PAPER SOLUTION. @ Rs. 50/- each (GST extra)

SUBJECTS

HINDI ENTIRE PAPER SOLUTION

MARATHI PAPER SOLUTION

SSC MATHS I PAPER SOLUTION

SSC MATHS II PAPER SOLUTION

SSC SCIENCE I PAPER SOLUTION

SSC SCIENCE II PAPER SOLUTION

SSC ENGLISH PAPER SOLUTION

SSC & HSC ENGLISH WRITING SKILL

HSC ACCOUNTS NOTES

HSC OCM NOTES

HSC ECONOMICS NOTES

HSC SECRETARIAL PRACTICE NOTES

2019 Board Paper Solution

HSC ENGLISH SET A 2019 21st February, 2019

HSC ENGLISH SET B 2019 21st February, 2019

HSC ENGLISH SET C 2019 21st February, 2019

HSC ENGLISH SET D 2019 21st February, 2019

SECRETARIAL PRACTICE (S.P) 2019 25th February, 2019

HSC XII PHYSICS 2019 25th February, 2019

CHEMISTRY XII HSC SOLUTION 27th, February, 2019

OCM PAPER SOLUTION 2019 27th, February, 2019

HSC MATHS PAPER SOLUTION COMMERCE, 2nd March, 2019

HSC MATHS PAPER SOLUTION SCIENCE 2nd, March, 2019

SSC ENGLISH STD 10 5TH MARCH, 2019.

HSC XII ACCOUNTS 2019 6th March, 2019

HSC XII BIOLOGY 2019 6TH March, 2019

HSC XII ECONOMICS 9Th March 2019

SSC Maths I March 2019 Solution 10th Standard11th, March, 2019

SSC MATHS II MARCH 2019 SOLUTION 10TH STD.13th March, 2019

SSC SCIENCE I MARCH 2019 SOLUTION 10TH STD. 15th March, 2019.

SSC SCIENCE II MARCH 2019 SOLUTION 10TH STD. 18th March, 2019.

SSC SOCIAL SCIENCE I MARCH 2019 SOLUTION20th March, 2019

SSC SOCIAL SCIENCE II MARCH 2019 SOLUTION, 22nd March, 2019

XII CBSE - BOARD - MARCH - 2019 ENGLISH - QP + SOLUTIONS, 2nd March, 2019

HSC Maharashtra Board Papers 2020

(Std 12th English Medium)

HSC ECONOMICS MARCH 2020

HSC OCM MARCH 2020

HSC ACCOUNTS MARCH 2020

HSC S.P. MARCH 2020

HSC ENGLISH MARCH 2020

HSC HINDI MARCH 2020

HSC MARATHI MARCH 2020

HSC MATHS MARCH 2020


SSC Maharashtra Board Papers 2020

(Std 10th English Medium)

English MARCH 2020

HindI MARCH 2020

Hindi (Composite) MARCH 2020

Marathi MARCH 2020

Mathematics (Paper 1) MARCH 2020

Mathematics (Paper 2) MARCH 2020

Sanskrit MARCH 2020

Sanskrit (Composite) MARCH 2020

Science (Paper 1) MARCH 2020

Science (Paper 2)

Geography Model Set 1 2020-2021


MUST REMEMBER THINGS on the day of Exam

Are you prepared? for English Grammar in Board Exam.

Paper Presentation In Board Exam

How to Score Good Marks in SSC Board Exams

Tips To Score More Than 90% Marks In 12th Board Exam

How to write English exams?

How to prepare for board exam when less time is left

How to memorise what you learn for board exam

No. 1 Simple Hack, you can try out, in preparing for Board Exam

How to Study for CBSE Class 10 Board Exams Subject Wise Tips?

JEE Main 2020 Registration Process – Exam Pattern & Important Dates


NEET UG 2020 Registration Process Exam Pattern & Important Dates

How can One Prepare for two Competitive Exams at the same time?

8 Proven Tips to Handle Anxiety before Exams!

BUY FROM PLAY STORE

DOWNLOAD OUR APP

HOW TO PURCHASE OUR NOTES?

S.P. Important Questions For Board Exam 2022

O.C.M. Important Questions for Board Exam. 2022

Economics Important Questions for Board Exam 2022

Chemistry Important Question Bank for board exam 2022

Physics – Section I- Important Question Bank for Maharashtra Board HSC Examination

Physics – Section II – Science- Important Question Bank for Maharashtra Board HSC 2022 Examination

Important-formula



THANKS