Important Adjustments

Items If items appear on debit

side
If items appear on
credit side
If items not given
whether debit or credit

Returns Shown on credit side of
trading A/c by way of
deduction from the
amount of sales
Shown on debit side of
trading A/c by way of
deduction from the
amount of purchases
It may be assumed as
Return Inward or
Return Outward by
giving an assumption to
that effect
Discount Shown on the debit side
of P& L A/c as discount
Allowed
Shown on the credit
side of P& L A/c as
discount Received
It may be assumed as
discount Allowed or
Received by giving an
assumption to that
effect
Commission Shown on the debit side
of P&L A/c as
Commission Allowed
Shown on the credit
side of P&L A/c as
Commission Earned
It may be assumed as
Commission Allowed or
Commission Earned by
giving an assumption to
that effect
Interest Shown on the debit side
of P&L A/c as Interest
Allowed
Shown on the credit
side of P&L A/c as
Interest Earned
It may be assumed as
Interest Allowed or
Interest Earned by
giving an assumption to
that effect
Rent Shown on the debit side
of P&L A/c as Rent Paid
Shown on the credit
side of P&L A/c as Rent
Earned
It may be assumed as
Rent Paid or Rent
Earned
Carriage Shown on the debit side
of Trading A/c (if
assumed as carriage on
purchases) or P&L A/c
(if assumed as carriage
on sales)
________ It may be assumed as
carriage on purchases
or carriage on sales by
giving an assumption to
that effect
Freight Shown on the debit side
of Trading A/c (if
assumed as Freight
Inwards) or P &L A/c (if
assumed as Freight
outwards)
________ It may be assumed as
Freight Inwards or
Freight outwards by
giving an assumption to
that effect
Wages & Salaries Shown on the debit side
of Trading A/c
________ ________
Salaries & Wages Shown on the debit side
of P &L A/c
________ ________
Trade Expenses Shown on the debit side
of Trading A/c or P &L
A/c (if Sundry expenses
or office expenses are
given )
________ ________
Important Adjustments
Items Treatment in Trading
A/c
Treatment in Profit &
Loss A/c
Treatment in Balance
Sheet
Closing Stock To be credited to
Trading A/c
______________ To be shown on Asset
side of Balance Sheet
Depreciation ______________ To be Debited to Profit
& Loss A/c
To be deducted from
the value of an asset in
Balance Sheet
Outstanding Expense Amount to be added to
concerned expense in
Trading A/c
Amount to be added to
concerned expense in
Profit & Loss A/c
To be shown on
Liabilities side of
Balance Sheet
Prepaid Expense Amount to be deducted
from concerned
expense in Trading A/c
Amount to be deducted
from concerned
expense in Profit & Loss
A/c
To be shown on Asset
side of Balance Sheet
Interest on Drawings _____________ To be credited to Profit
& Loss A/c
To be deducted from
capital in Balance Sheet
Interest on Capital _____________ To be debited to Profit
& Loss A/c
To be added to capital
in Balance Sheet
Bad Debts _____________ Amount of Bad Debts to
be debited to Profit &
Loss A/c
Amount to be deducted
from Sundry Debtors in
Balance Sheet
Reserve for Doubtful
debts
_____________ Amount of RDD to be
debited to Profit & Loss
A/c
Amount to be deducted
from Sundry Debtors in
Balance Sheet
Provision for discount
on Debtors
_____________ To be Debited to Profit
& Loss A/c
To be deducted from
Sundry Debtors in
Balance Sheet
Provision for discount
on Creditors
_____________ To be credited to Profit
& Loss A/c
To be deducted from
Sundry Creditors in
Balance Sheet
outstanding income _____________ Amount to be added to
respective income on
credit side of Profit &
Loss A/c
To be shown on Asset
side of Balance Sheet
Income received in
advance
_____________ Amount to be deducted
from respective income
on credit side of Profit
& Loss A/c
To be shown on
Liabilities side of
Balance Sheet
Goods used by
proprietor for personal
use
To be deducted from
purchases
OR
To be credited to
Trading A/c
_____________ To deducted from
capital as drawings
Distribution of Goods as
free Samples
To be deducted from
purchases OR
To be credited to
Trading A/c
To be Debited to
Profit& Loss A/c as
Advertisements
______________
Important Adjustments

Goods destroyed by fire
and insurance company
admitted the claim
The amount of goods
destroyed to be
credited to Trading A/c
The amount of loss to
be debited to Profit &
Loss A/c
The claim amount to be
shown on Asset side of
Balance Sheet
Interest on loan taken _____________ The amount to be
debited to Profit & Loss
A/c
Amount to be added to
loan account on
liabilities side of
Balance Sheet
Interest on loan given _____________ The amount to be
credited to Profit & Loss
A/c
Amount to be added to
loan account on Asset
side of Balance Sheet
Unrecorded Purchases The amount to be
added to purchases in
Trading Account
_____________ Amount to be added to
Creditors
Unrecorded Sales The amount to be
added to sales in
Trading Account
_____________ Amount to be added to
Debtors