Al-Hamd College

ADJUSTMENTS AT A GLANCE
Effect on Effect on
S.No. Adjustment Alternative Adjusting Entry Trading or Balance
P&L A/c Sheet
Outstanding/due/unpaid/ Added in related Liabilities
Outstanding accrued/arrear/ Expense item or the Dr. side of the
1 Expenses still payable/not yet paid/ To Outstanding Expenses side of Trading or Balance
owing P&L A/c Sheet
Deducted in Assets
Prepaid/unexpired/ Prepaid Expenses related item or side of the
Prepaid
2 Expenses
paid in advance/carry To Expense the Dr. side of Balance
forward to the next year Trading or P&L Sheet
A/c
Added in related Assets
Accrued Accrued Income item or the Cr. side of the
3 Income
Accrued/Receivable
To Income side of Trading or Balance
P&L A/c Sheet
Deducted in Liabilities
Income related item or side of the
Unearned Unearned/Received in
4 Income Advance/Unexpired
To Unearned Income the Cr. side of Balance
Trading or P&L Sheet
A/c
Deduction
Deprecation out of
Decrease or reduce in Dr. Profit & Loss
5 Depreciation
value/write off
To Asset
A/c
concerned
asset in the
asset side
Interest on capital Added in the
Interest on Dr. Profit & Loss
6 capital
------------ To capital
A/c
capital in the
Liability side
Deduction
Interest on Capital/drawings Cr. Profit & Loss out of the
7 drawing
------------
To Interest on drawings A/c capital in the
liability side
Deduction
Provision for Reserve/allowance for Profit & Loss/Bad debts Dr. Profit & Loss out of debtors
8 bad debts bad debts To provision for bad debts A/c in the asset
side
Deduction
Provision for Profit & Loss/discount on out of debtors
Reserve/allowance for Dr. Profit & Loss
9 discount on
discount
debtors
A/c
in the asset
debtors To provision for side
discount on debtors
Deduction
Provision for Provision for discount on out of the
Reserve/allowance for Cr. Profit & Loss
10 discount on
discount
creditors
A/c
creditors in
creditors To Profit & Loss/ the liability
discount on debtors side
Assets
Closing Stock side of the
11 Closing Stock Stock/Inventory
To Trading Account
Cr. Trading A/c
Balance
Sheet

Prepared by: