Question

8. State any one adjustment.
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Answer 1

Answer:

Example of an Adjustment entry in Accounting is :-

➛ Outstanding Expenses or Expenses due but not paid.

★ Accounting treatmeant for this adjustment while preparing Final Accounts :-

➛ When outstanding expenses or expenses due but not paid appear in the adjustment, it will be shown at two places in the Final Accounts. On the one hand, outstanding expenses will be added to the concerned expenses on the Debit side of Trading or Profit and Loss Account and on the other hand, it will be shown on the Liabilities side of the Balance Sheet.

MORE TO KNOW :

★ Adjustment Entry :-

➭ Day to day recording of business transactions are done on cash basis and therefore all revenue and expenses are recorded as and when they are received and paid. Hence, in order to arrive at the amount of actual revenue earned and expenses incurred, some adjustments may be necessary while preparing the Final Accounts. For the purpose of disclosing the correct amount of net profit or net loss by the Profit and Loss Account and for presenting the true financial position of the business through the Balance Sheet some necessary journal entries are passed as adjustments. Such entries are known as Adjustment Entries.

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