Accountancy students are familiar with final accounts preparation. It is the task of consolidating data for an entire financial year from companyâ€™s accounts and presenting it according to prescribed standards.
Adjusting entries in accounts
Adjusting entries are those journal entries which are entered at the end of accounting period to make corrections in accounts before financial statements are prepared. They are prepared in accordance with matching principle, which means revenue of a particular period has to be matched with expenses of the same period. This is an important topic of study in accountancy. Summarized presentation of adjustments homework answers are sought by many as it carries weight age in getting good scores.
Cash vs accrual basis of accounting
Under cash basis of accounting, income and expenses are recorded in financial statements in the year in which they are received or paid. Under accrual basis of accounting, the revenue and outflow are recorded in the year in which they become due irrespective of whether they are actually paid or received. As per GAAP, business concerns are required to follow accrual basis for accounting. As accountancy students, you have to be good in GAAP based accounting process. Being adept in summarized presentation of adjustments homework answers is a prerequisite for this.
Dealing with different types of adjustments
There are different types of adjusting entries based on revenue recognition principle. Each adjustment is done considering the values applicable for current period.
Sometimes a company pays some expenses for which benefits are obtained over a period of time. At the end of accounting year, the benefits might not be fully availed by it. A classic example for this is insurance paid. Insurance charges are paid in advance for a whole year. When accounts are prepared, insurance charges pertaining to that year will be considered as expense and those pertaining to next year will be considered as an asset under the head â€˜pre-paid expensesâ€™.
When a company has received income from customers, but no goods or service has been provided to them, such income is unearned or received in advance. It is stated as a liability in the final accounts.
There are some expenses which accrue or become due in a month but has to be paid in the next month. Electricity charge is an example of this. A charge due in the month of March has to be recorded in March only, although it is paid in April. This is shown in income statements as liability under the head accrued expense.
Any Income due to the company has to be shown in the period in which it is due, although it has not been received. It is treated as asset under the head â€˜accrued incomeâ€™.
Non-cash expenses are those expenses which do not involve any outflow of cash. Depreciation is the major non-cash expense for a company. As fixed assets like machinery are used by business, its value reduces over time due to wear and tear. Depreciation is the provision for this. This is recorded at the end of a year since it is not an ongoing expense.
Trouble with summarized presentation of adjustments homework answers
The number of student who complain about inability to cope with accounting assignments is alarming. Let me remind you, a major cause for this is your lack of understanding of basic concepts.
A typical assignment on final account preparation will have an unadjusted trial balance with a long list of adjustments to be made. This can be nerve wrecking if you are not sure about the accounting treatment of every item.
Every adjusting entry is different and has different accounting treatment. The order in which it has to be done is also important. For example, for calculating depreciation, value of machinery will be given together with percentage of depreciation applicable. But if some machinery has been sold or bought during the year, this also needs to be taken care of. Thus every transaction can cause problem, unless your fundamentals are clear.
Undoubtedly, every problem with adjusting entries involves lots of calculations. If you dislike numbers from the start, there is no way you can go ahead. Make it a point to do practice and get over the dislike.
Why is summarized presentation needed?
When you are given an assignment for accounting adjustments, it calls for a lengthy answer. For every item, you need to do lots of calculations and steps. A summary of adjustments will give the examiner a quick idea of what you have done. If the summary is correctly written and neatly presented, it can earn you some extra marks. So be highly diligent while framing summarized presentation of adjustments homework answers.
Make best use of online resources
As a student of today, you are well aware of the vast possibilities of the world of internet. Today, technology has brought a drastic change in the way things are taught and learned. Both teachers and students take online help. If used meticulously, these resources can help you to no end.
Most students go online for help with assignments. Those who have experience can vouch for the fact that a good assignment help site is of immense help when you are struggling with lots of time bound assignments. For tougher topics like summarized presentation of adjustments homework answers, you get ready answers in short time.
A good site will have the best of the field working for them. They are available to answer all your doubts at any time of the day. Raise your query and get it answered without leaving the comforts of your home.
Accounting is an area that requires lots of practice to achieve perfection. Search for educational sites which have practice and test options. They will help you to strengthen your knowledge base.
Move ahead with the determination to excel. With hard work and external help, you can reach pinnacles of success in accounting.