Question

Give any three items which shows in both balance sheet and Profit and losss or

Trading Account
only correct answer ​

Answer 1

Explanation:

depreciation, outstanding income and advance income

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Answer 2

ANSWER :

Adjustment entries of Final Accounts are shown in both the Trading Account or Profit and Loss Account and the Balance Sheet.

❖ Three items which shown in both the Trading Account or Profit and Loss Account and the Balance Sheet are :-

• [1] Outstanding Expenses or Expenses due but not paid : Outstanding Expenses or Expenses due but not paid means the expenses which have been incurred during the financial year but have not been paid till the date of preparation of Trial Balance. When outstanding expenses or expenses due but not paid appear in the adjustment, it will be added to the concerned expenses on the debit side of either Trading Account or Profit and Loss Account. Again, it will also be shown on the Liabilities side of the Balance Sheet.

• [2] Prepaid Expenses or Expenses paid in advance or Unexpired Expenses : Prepaid Expenses or Expenses paid in advance or Unexpired Expenses are the expenses, the payment of which have been made during the current financial year but the benefit of such payments will be availed partly or fully in the next accounting year. When such expenses appear in the adjustment, it will be deducted from thr concerned expenses on the debit side of either Trading Account or Profit and Loss Account. Again, it will also be shown on the Assets side of the Balance Sheet.

• [3] Depreciation : Depreciation is the loss or decrease in the value of fixed assets due to their constant use and expiry of time. Depreciation on assets effect the profit of the business as well as the value of the assets. When depreciation appears in the adjustment, it will be shown on the debit side of the Profit and Loss Account and also will be deducted from the respective assets on the Assets side of the Balance Sheet.

❖ Some other items which are shown in both the Trading Account or Profit and Loss Account as well as the Balance Sheet are :-

• ➻ Accrued Income or Income Receivable

• ➻ Unearned Income or Income Received in Advance

• ➻ Interest on Capital

• ➻ Interest on Drawings

• ➻ Interest on Loan

• ➻ Bad Debts or Doubtful Debts

• ➻ Provision for Bad and Doubtful Debts

• ➻ Provision for Discount on Debtors

• ➻ Provision for Discount on Creditors

• ➻ Abnormal Loss