Summarized Presentation of Adjustments

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This adjustment factor is one of the most important points in present times in accounting, and a detailed summary is of utmost importance to ensure that a detailed understanding of this topic can be obtained.

While summarizing this presentation, it is important that one should keep into consideration the 4 points against which the presentation is to be made.

  • Adjustments
  • Journal entry
  • Adjustments in Trading in Profit and Loss accounts
  • Adjustments in the Balance sheet

Every detail is to be placed in regards to these heads.

  1. When Adjustments are made in CLOSING STOCK, then Journal Entry shows CLOSING STOCK ACCOUNT TO TRADING ACCOUNT, Adjustments in Trading Account are seen to be posted on CREDIT SIDE OF TRADING ACCOUNT, and Adjustments in Balance Sheet are shown in ASSET SIDE.
  1. When Adjustment is made in DEPRECIATION, then Journal Entry shows DEPRECIATION B ACCOUNT TO ASSET ACCOUNT, Adjustments in Trading Account are seen to be posted on DEBIT SIDE OF PROFIT AND LOSS ACCOUNT, Adjustments in Balance Sheet are shown as DEDUCTED FROM THE ASSETS THAT ARE CONCERNED.
  1. When Adjustment is made in APPRECIATION, then Journal Entry shows ASSET ACCOUNT TO APPRECIATION ACCOUNT, Adjustments in Trading Account are seen to be posted on CREDIT SIDE OF PROFIT AND LOSS ACCOUNT, Adjustments in Balance Sheet are shown as ADDED TO CONCERNED ASSETS.
  1. When Adjustment is made in OUTSTANDING EXPENSES, then Journal Entry shows EXPENSES ACCOUNT TO OUTSTANDING EXPENSES ACCOUNT, Adjustments in Trading Account are seen to be added to the CONCERNED EXPENSE ON DEBIT SIDE OF PROFIT AND LOSS AND TRADING ACCOUNT, Adjustments in Balance Sheet are shown on LIABILITIES SIDE.
  1. When Adjustment is made in PREPAID EXPENSES, then Journal Entry shows PREPAID EXPENSE ACCOUNT TO EXPENSE ACCOUNT, Adjustments in Trading Account are seen to be DEDUCTED FROM CONCERNED EXPENSE ON DEBIT SIDE OF PROFIT AND LOSS ACCOUNT,Adjustments in Balance Sheet are shown on ASSETS SIDE.
  1. When Adjustment is made in ACCRUED INCOME, then Journal Entry shows ACCRUED INCOME TO INCOME ACCOUNT, Adjustments in Trading Account are seen to be ADDED TO CONCERNED INCOME ON CREDIT SIDE OF PROFIT AND LOSS ACCOUNT, Adjustments in Balance Sheet are shown on ASSETS SIDE.
  1. When Adjustment is made in UNEARNED INCOME, then Journal Entry shows INCOME ACCOUNT TO UNEARNED INCOME ACCOUNT, Adjustments in Trading Account are seen to be DEDUCTED FROM CONCERNED INCOME ON CREDIT SIDE, Adjustments in Balance Sheet are shown on LIABILITIES SIDE.
  1. When Adjustment is made in INTEREST ON CAPITAL, then Journal Entry shows INTEREST ON CAPITAL ACCOUNT TO CAPITAL ACCOUNT, Adjustments in Trading Account are seen to be on DEBIT SIDE OF PROFIT AND LOSS ACCOUNT, Adjustments in Balance Sheet are shown ADDED TO CAPITAL ON LIABILITIES SIDE.
  1. When Adjustment is made in INTEREST ON DRAWINGS, then Journal Entry shows DRAWINGS ACCOUNT TO INTEREST ON DRAWINGS ACCOUNT, Adjustments in Trading Account are seen to be on CREDIT SIDE OF PROFIT AND LOSS ACCOUNT, Adjustments in Balance Sheet are shown DEDUCTED FROM CAPITAL ON LIABILITIES
  1. When Adjustment is made in INTEREST ON INVESTMENT, then Journal Entry shows INTEREST TO INTEREST ON INVESTMENT ACCOUNT, Adjustments in Trading Account are seen to be on CREDIT SIDE OF PROFIT AND LOSS ACCOUNT, Adjustments in Balance Sheet are shown ADDED TO INVESTMENT ON ASSET SIDE.
  1. When Adjustment is made in INTEREST ON BORROWED LOANS, then Journal Entry shows INTEREST ON LOANS ACCOUNT TO LOANS ACCOUNT, Adjustments in Trading Account are seen to be on DEBIT SIDE OF PROFIT AND LOSS ACCOUNT, Adjustments in Balance Sheet are shown ADDED TO LOANS ON LIABILITIES SIDE.
  1. When Adjustment is made in INTEREST ON LOANS ADVANCED, then Journal Entry shows LOANS ACCOUNT TO INTEREST ON LOANS ACCOUNT, Adjustments in Trading Account are seen to be on CREDIT SIDE OF PROFIT AND LOSS ACCOUNT, Adjustments in Balance Sheet are shown ADDED TO LOANS OF ASSET SIDE.
  1. When Adjustment is made in BAD DEBTS, then Journal Entry shows BAD DEBT ACCOUNT TO DEBTORS ACCOUNT, Adjustments in Trading Account are seen to be on DEBIT SIDE OF PROFIT AND LOSS ACCOUNT, Adjustments in Balance Sheet are shown DEDUCTED FROM DEBTORS ON ASSET SIDE.
  1. When Adjustment is made in PROVISION FOR BAD DEBTS, then Journal Entry shows PROFIT AND LOSS ACCOUNT TO PROVISION FOR DEBTS ACCOUNT, Adjustments in Trading Account are seen to be on DEBIT SIDE OF PROFIT AND LOSS ACCOUNT, Adjustments in Balance Sheet are shown DEDUCTED FROM DEBTORS ON ASSET SIDE.
  1. When Adjustment is made in PROVISION FOR DISCOUNT ON DEBTORS, then Journal Entry shows PROFIT AND LOSS ACCOUNT TO PROVISION FOR DISCOUNT ON DEBTORS, Adjustments in Trading Account are seen to be on DEBIT SIDE OF PROFIT AND LOSS ACCOUNT, Adjustments in Balance Sheet are shown DEDUCTED FROM DEBTORS ON ASSET SIDE.
  1. When Adjustment is made in PROVISION FOR DISCOUNT ON CREDITORS, then Journal Entry shows PROVISION FOR DISCOUNT ON CREDITORS TO PROFIT AND LOSS ACCOUNT, Adjustments in Trading Account are seen to be on CREDIT SIDE OF PROFIT AND LOSS ACCOUNT, Adjustments in Balance Sheet are shown DEDUCTED FROM CREDITORS ON LIABILITY SIDE.
  1. When Adjustment is made in ACCIDENTAL LOSS OF STOCK, then Journal Entry shows LOSS OF STOCK ACCOUNT TO TRADING OR PURCHASE ACCOUNT, Adjustments in Trading Account are seen to be on DEDUCTED FROM PURCHASE OR EVEN POSTED ON DEBIT SIDE OF PROFIT,AND LOSS ACCOUNT, OR CREDIT SIDE OF TRADING ACCOUNT, Adjustments in Balance Sheet are shown as NO EFFECT.
  1. When Adjustment is made in ACCIDENTAL LOSS OF GOODS, then Journal Entry shows LOSS OF STOCK ACCOUNT OR INSURANCE COMPANY ACCOUNT TO TRADING ACCOUNT, Adjustments in Trading Account are seen to be on AMOUNT OF CLAIM ADMITTED BY LOSS OF STOCK AS WELL AS LOSS OF STOCK ON DEBIT SIDE OF PROFIT AND LOSS ACCOUNT, Adjustments in Balance Sheet are shown as ASSET SIDE WITH AMOUNT OF CLAIM ADMITTED AS DEBTOR.
  1. When Adjustment is made in LOSS OF ASSETS BY FIRE, then Journal Entry shows LOSS OF FIRE TO ASSET ACCOUNT, Adjustments in Trading Account are seen to be on DEBIT SIDE OF PROFIT AND LOSS ACCOUNT, Adjustments in Balance Sheet are shown as DEDUCTED FROM ASSETS.
  1. When Adjustment is made in ACCIDENTAL LOSS OF ASSETS,then Journal Entry shows INSURANCE COMPANY ACCOUNT OR LOSS OF FIRE ACCOUNT TO ASSETS ACCOUNT, Adjustments in Trading Account are seen to be on DEBIT SIDE OF PROFIT AND LOSS ACCOUNT, Adjustments in Balance Sheet are shown as DEDUCTED FROM ASSETS.
  1. When Adjustment is made in OUTSTANDING MANAGER’S COMMISSION, then Journal Entry shows PROFIT AND LOSS ACCOUNT TO OUTSTANDING MANAGER’S COMMISSION ACCOUNT, Adjustments in Trading Account are seen to be on DEBIT SIDE OF PROFIT AND LOSS ACCOUNT, Adjustments in Balance Sheet are shown as LIABILITIES
  1. When Adjustment is made in GOODS SENT ON SALE OR RETURN BASIS, then Journal Entry shows SALES TO DEBTORS ACCOUNT AND STOCK TO TRADING ACCOUNT, Adjustments in Trading Account are seen to be on CREDIT SIDE, Adjustments in Balance Sheet are shown as DEDUCTION.
  1. When Adjustment is made in GOODS TAKEN BY PROPRIETOR FOR PERSONAL USE, then Journal Entry shows DRAWING TO PURCHASE ACCOUNT, Adjustments in Trading Account are seen to be on DEBIT IN TRADING ACCOUNT, Adjustments in Balance Sheet are shown as CAPITAL ON LIABILITIES.
  1. When Adjustment is made in GOODS GIVEN AS CHARITY, then Journal Entry shows CHARITY ACCOUNT TO PURCHASE ACCOUNT, Adjustments in Trading Account are seen to be on DEDUCTED FROM PURCHASE OF DEBIT SIDE OF TRADING ACCOUNT, Adjustments in Balance Sheet are shown as DEDUCTED FROM CAPITAL ON LIABILITIES.
  1. When Adjustment is made in GOODS AS FREE SAMPLE, then Journal Entry shows ADVERTISING OR FREE SAMPLES ACCOUNT TO PURCHASE ACCOUNT, Adjustments in Trading Account are seen to be on DEBIT SIDE OF PROFIT AND LOSS ACCOUNT, Adjustments in Balance Sheet are shown as NO EFFECT.
  1. When Adjustment is made in WAGES PAID FOR BUILDING CONSTRUCTION, then Journal Entry shows BUILDING ACCOUNT TO WAGES ACCOUNT, Adjustments in Trading Account are seen to be on DEBIT SIDE OF TRADING ACCOUNT, Adjustments in Balance Sheet are shown as ADDED TO ASSET SIDE.
  1. When Adjustment is made in GOODS IN TRANSIT, then Journal Entry shows GOODS IN TRANSIT TO SUPPLIERS ACCOUNT, Adjustments in Trading Account are seen to be with NO EFFECT, Adjustments in Balance Sheet are shown as GOODS IN TRANSIT ON ASSET SIDE, LIABILITIES ON SUPPLIER SIDE.
  1. When Adjustment is made in REMUNERATION PAID TO EMPLOYEES, then Journal Entry shows SALARIES TO EMPLOYEE’S PERSONAL ACCOUNT, Adjustments in Trading Account are seen to be with ADDED SALARIES ON DEBIT SIDE OF PROFIT AND LOSS ACCOUNT,Adjustments in Balance Sheet are shown as DEDUCTED FROM DEBTORS ON ASSET SIDE.

When  Adjustment is made in DEFERRED REVENUE EXPENDITURE PAID IN FUTURE, then Journal Entry shows ADVERTISING TO BANK ACCOUNT AND VICE VERSA, Adjustments in Trading Account are seen to be with DEBACLE TO PROFIT AND LOSS ACCOUNT, Adjustments in Balance Sheet are shown as ASSETS SIDE WITH UN AMORTIZED AMOUNT.

 

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