BIRD'S EYE VIEW OF ADJUSTMENTS

Adjustment and adjusting Effect on trading a/c or profit and loss Effect on balance sheet
entry account

1. Closing stock Trading a/c credit side "By closing Assets side
Closing stock account Dr. stock" "Closing stock”
To Trading Account

2. Outstanding expenses Trading or Profit and loss account Liabilities side

Expenditure a/c Dr. debit side (+) particular expenditure "Outstanding expenses" -o
To Outstanding Exp. a/c
z
3. Prepaid expenses Assets side 0
Trading or Profit and loss account -T3
Prepaid expenses a/c Dr. debit side (-) particular expenditure "Prepaid expenses" m
To Expenses a/c
0
d. Accrued income Profit and loss account credit side (+) m
Assets side
Accrued Income a/c Dr., particular income 'Accrued income" 0
To Income a/c 0
.c
5. Income received in advance Profit and loss account credit side (-) z
Liabilities side
Income a/c Dr. particular income z
"Income reserved in advance"
To income received in advance a/c

6. Interest on capital, Profit and loss account debit side Liabilities side
Interest on capital a/c Dr. 'Interest on capital' (+) Capital
To Capital a/c.

7. Interest on drawings Profit and loss account credit side Liabilities side (-) capital
Capital account Dr. "Interest on drawings"
To interest on drawings

8. Depreciation Profit and loss account debit side

"Depreciation" Assets side ( - ) particular asset
Depreciation a/c Dr
To Asset account
,