Financial statements with

adjustments
 CLOSING
STOCK
Adjustment
Stock of goods at the end of the year is 24,000(market
value 30,000)

Trading account
Particular Amount Particular Amount
By closing stock 10000

BALANCE SHEET
LIABILITIES Amount Assets Amount
Closing stock 10000
 OUTSTANDING
Name of account
EXPENSES
EXAMPLE: Extract from TRIAL BALANCE
L.F. DEBIT CREDIT
WAGES 2,20,000

Adjustment
OUTSTANDING WAGES AMOUNT TO 20,000/-

Trading account
Particular Amount Particular Amount
To wages 2,20,000
+outstanding wages 20,000 2,40,000

Balance sheet
Liability Amount Assets Amount
Outstanding wages 20,000
 Prepaid EXPENSES
EXAMPLE: Extract from TRIAL BALANCE
Name of account L.F. DEBIT CREDIT
Insurance A/C 20,000

Adjustment
PREPAID INSURANCE AMOUNT TO 5000/-

Profit and loss account

Particular Amount Particular Amount
To insurance 20,000
-insurance premium 5000 25,000

Balance sheet
Liabilities Amount Assets Amount
Prepaid Insurance 5000
 ACCURED
Name of account
INCOME
EXAMPLE: Extract from TRIAL BALANCE
L.F. DEBIT CREDIT
Commission received 15,000

Adjustment
Commission earned but not received 3,000/-

Profit and loss account

Particular Amount Particular Amount
By commission 15000
+accrued commission 3000 18000

Balance sheet
Liabilities Amount Assets Amount
Accrued income 3000
 UNEARNED
Name of account
INCOME
EXAMPLE: Extract from TRIAL BALANCE
L.F. DEBIT CREDIT
Rent 39,000

Adjustment
Rent received but not earned 3,000/-

Profit and loss account

Particular Amount Particular Amount
By rent 39000
-unearned rent 3000 36000

Balance sheet
Liabilities Amount Assets Amount
Unearned income 3000
 DEFERRED REVENUE EXPENDITURE
 These are those expenditure which are revenue in nature but the benefits of which
are likely to be derived over a number of years.

EXAMPLE:A company invested a huge amount of 2,00,000/- to introduce a

new product in market and it is estimated that the benefit last for 4 years.
EXAMPLE: Extract from TRIAL BALANCE
Name of account L.F. DEBIT CREDIT
Advertising 2,00,000

Adjustment
 ¼ of the advertising expense belong to this year.
Profit and loss account
Particular Amount Particular Amount
TO ADVERTISING EXPENSES(1/4 of 2,00,000) 50,000

Balance sheet
Liabilities Amount Assets Amount
Advertising expenses 1,50,000