-This question was submitted by a user and answered by a volunteer of our choice.
In my opinion, the following are some of the difficult adjustments in the final accounts.
| Sr No. | Adjustments | 1st effect | 2nd effect |
| 1 | Uninsured goods destroyed by fire/accident | Trading A/c – Credit side (Gross amount) | Profit & Loss A/c – Debit side (Gross amount) |
| 2 | Insured goods destroyed by fire/accident (eg. 50,000 worth of goods destroyed & insurance company accepted the claim of 40,000) | Trading A/c – Credit side (Gross amount ie. 50,000) | a. Balance Sheet – Asset side (Claim amount ie.40,000) b. Profit & Loss A/c – Debit side (Amount of Loss ie.10,000) |
| 3 | Unrecorded Purchases | Trading A/c – Debit side (Add to Purchases) | Balance Sheet – Liability side (Add to Creditors) |
| 4 | Unrecorded Sales | Trading A/c – Credit side (Add to Sales) | Balance Sheet – Asset side (Add to Debtors) |
| 5 | Provision for Discount on Debtors | Profit & Loss A/c – Debit side | Balance Sheet – Asset side (Deducted from Debtors) |
| 6 | Provision for Discount on Creditors | Profit & Loss A/c – Credit side | Balance Sheet – Liability side (Deducted from Creditors) |
| 7 | Bills Receivable dishonoured | Balance Sheet – Asset side (Add the amount of bills dishonoured to Debtors) | Balance Sheet – Asset side (Deduct the amount of bills dishonoured from Bills Receivable) |
| 8 | Bills Payable dishonoured | Balance Sheet – Liability side (Add the amount of bills dishonoured to Creditors) | Balance Sheet – Liability side (Deduct the amount of bills dishonoured from Bills Payable) |
| 9 | Deferred Expenses (eg. Advertisement expenses paid for 5 years) | Profit & Loss A/c – Debit side (Advertisement expenses related to current year ie. 1/5th of Total) | Balance Sheet – Asset side (Remaining amount of advertisement is shown as Prepaid advertisement ie. 4/5th of Total) |
| 10 | Revenue Receipts included in Capital Receipts (eg. Sale of Goods included in Sale of Furniture) | Trading A/c – Credit side (Add to Sales) | Balance Sheet – Asset side (Add back the sales amount to Furniture) |
| 11 | Revenue Expenditure included in Capital Expenditure | Trading A/c /Profit & Loss A/c – Debit side (Add to that particular Revenue Expenditure) | Balance Sheet – Asset side (Deduct from that particular asset) |
| 12 | Capital Expenditure included in Revenue Expenditure | Trading A/c /Profit & Loss A/c – Debit side (Deduct from that particular Revenue Expenditure) | Balance Sheet – Asset side (Add to that particular asset) |
| 13 | Manager is allowed commission at a certain % on Net Profit
a. If commission eg.10% is quoted on “Net Profit before charging such commission”: b. If commission eg.10% is quoted on “Net Profit after charging such commission”: |
Profit & Loss A/c – Debit side (Manager’s Commission) | Balance Sheet – Liability side (Outstanding Manager’s Commission), OR Balance Sheet – Asset side (Reduce from Cash/Bank) |