Adjustments in Preparation of Financial Statements
Commerce ⇒ Accountancy
Adjustments in Preparation of Financial Statements starts at 11 and continues till grade 12.
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Describe the treatment of prepaid rent in the final accounts.
Explain the need for making adjustments for outstanding expenses at the end of the accounting period.
Explain the treatment of accrued income in the final accounts.
Explain the treatment of goods withdrawn by the proprietor for personal use in the final accounts.
A business has accrued interest of ₹1,500 at the end of the year. How will it be treated in the final accounts?
A business has commission receivable of ₹5,000 at year-end. How will it be shown in the final accounts?
A business has paid insurance premium of ₹12,000 for the year ending 31st March 2024, but the accounting year ends on 31st December 2023. Calculate the prepaid insurance to be shown in the Balance Sheet.
A business has rent paid of ₹24,000 for the year, but ₹4,000 is prepaid. What amount will be shown as rent expense in the Profit and Loss Account?
Which of the following adjustments will increase the net profit? (1) Outstanding Expenses (2) Prepaid Expenses (3) Accrued Income (4) Depreciation
Which of the following is an example of a non-cash expense? (1) Wages (2) Depreciation (3) Rent (4) Interest Paid
Which of the following is an example of an accrued income? (1) Interest earned but not received (2) Rent paid in advance (3) Salary outstanding (4) Depreciation
Which of the following is NOT a current liability? (1) Outstanding Expenses (2) Accrued Income (3) Income Received in Advance (4) Creditors
Depreciation is charged on ______ assets.
Fill in the blank: Adjustments ensure that the financial statements present a ______ and fair view of the financial position of the business.
Fill in the blank: Depreciation is a ______ expense.
Fill in the blank: Income received in advance is a ______ and is shown on the ______ side of the Balance Sheet.
True or False: Accrued expenses are added to the respective expense in the Profit and Loss Account and shown as a liability in the Balance Sheet.
True or False: Adjustments are made after the preparation of the trial balance but before the preparation of final accounts.
True or False: Adjustments are made only for expenses and not for incomes.
True or False: Adjustments are made to ensure that the matching principle is followed in accounting.
