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Adjustments Points To Be Kept in Mind: Term Explanation

The document discusses final accounts and key accounting concepts like capital vs revenue expenditures, manufacturing accounts, trading accounts, profit and loss accounts, and balance sheets. It provides explanations of important accounting terms like opening stock, closing stock, carriage inwards, drawings, bad debts, and more.

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89 views

Adjustments Points To Be Kept in Mind: Term Explanation

The document discusses final accounts and key accounting concepts like capital vs revenue expenditures, manufacturing accounts, trading accounts, profit and loss accounts, and balance sheets. It provides explanations of important accounting terms like opening stock, closing stock, carriage inwards, drawings, bad debts, and more.

Uploaded by

SachinSharma
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Chartered Accountancy

CPT Course

Session 1, Section A
Fundamentals of Accounting

Lecture 11 Final Accounts Part 2


1

Quick Revision Notes


3

Points to be kept in mind

Personal Expenses & Income should be separated from business Income &
Expenditure.
Distinction between Capital & Revenue Expenditure and Receipts.
Manufacturing Account shows the total cost of manufacturing the finished products and
sets out in detail the constituent elements of such cost.
Trading Account is debited with all expenses incurred in bringing the goods ready for
sale.
Profit & Loss Account starts with Gross Profit/Loss.
Profit & Loss Account has on the debit side all the expenses & losses which have not
been entered in the Trading Account.
Profit & Loss Account has on the credit side all the incomes and gains other than sales
Balance Sheet is prepared at a particular date, rather the close of a day and not for a
period.
Balance Sheet is prepared after preparation of Profit & Loss Account.

Important Terns & Concepts

Term
Opening Stock
Closing Stock

Explanation
The balance of stock carried forward from last period.
The balance of stock remaining at the end of current period.

Carriage Inwards

Incurred to bring the materials to the firms godown and make


them available for use.
The amount withdrawn by the owner out of the business.

Drawings
Bad Debts
Balance Sheet

Amount due from customer not recoverable.


A statement which sets out the assets and liabilities of a firm or
an institution as at certain date.

Term
Expenses Accrual
Income Accrual
Advance Income
Advance
Expenses
Stock in hand
Provision for Bad
Debts
Provision for
Discount
Depreciation
Abnormal Loss
Goods Sent on
Approval
Goods used
Sales Tax

Adjustments

Explanation
Appropriate Exp. A/c
Dr.
To Exp. Accrued A/c
Income Accrued A/c
Dr.
To Appropriate Income A/c
Appropriate Income A/c
Dr.
To Advance Income A/c
Prepaid Exp. A/c
Dr.
To Appropriate Exp. A/c
Stock of Material A/c
Dr.
To Appropriate Exp. A/c
Profit & Loss A/c
Dr.
To Provision for bad & doubtful debts A/c
Profit & Loss A/c
Dr.
To Provision for discount A/c
Depreciation Exp. A/c
Dr.
To Fixed Asset A/c
Loss by fire A/c
Dr.
To Purchase A/c
Sales A/c
Dr.
To Sundry Debtors A/c
Stock with customers A/c
Dr.
To Trading A/c
Donation/Drawings/Samples
Dr.
To Purchase A/c
Cash/Debtors A/c
Dr.
To Sales A/c
To Sales Tax Payable A/c
Sales Tax Payable A/c
Dr.
To Bank A/c

ICAI

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