Question
Why is it necessary to pass adjusting entries when final accounts are prepared?
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Answer
It is extremely important to record the adjusting entries in the preparation of final accounts.
- This is done in order to assess the true net profit or net loss of the business organisation.
- It helps us record those adjustments which were left or omitted and were not recorded in the accounts.
- It assists us to separate all the financial transactions into a year-wise category. The financial statements include only those entries which belong to the current year. It rules out the previous and forthcoming years’ entries which are the basis for accrual basis of accounting.
- Further, it provides us the room for making various provisions which are made at the end of the year, after assessing the entire year’s performance.
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Prepare a Trading Account from the following particulars for the year ended 31st March 2017:
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Following information of an accounting year is given:
Opening Capital ₹ 60,000; Drawings ₹ 5,000; Capital added during the year ₹ 10,000 and Closing Capital ₹ 90,000. Calculate the Profit or Loss for the year.
Opening Capital ₹ 60,000; Drawings ₹ 5,000; Capital added during the year ₹ 10,000 and Closing Capital ₹ 90,000. Calculate the Profit or Loss for the year.
Goods costing ₹ 26,000 were sent to a customer at 20% profit on sale on sale or return basis. Customer returned goods of the selling price of ₹ 7,000. At what amount the remaining goods with the costomer will be shown in the Balance Sheet?
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₹
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Net Profit
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5,00,000
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6,000
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Loss on sale of Furniture
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12,000
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Loss by Fire
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1,20,000
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Mayank does not keep proper records of his business, he gives you the following information:
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| ₹ | |
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| Capital added during the year | 37,500 |
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Define Depreciation.
Following information was taken from an Income Statement:
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Calculate Closing Stock and the Cost of Goods Sold.
Calculate operating profit from the following:
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₹
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Net Profit
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5,00,000
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Dividend Received
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6,000
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Loss on sale of Furniture
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12,000
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Loss by Fire
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50,000
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Salaries
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1,20,000
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Interest on Loan from Bank
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10,000
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Rent Received
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24,000
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Donation
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5,100
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