final account format

Q. How Will You treat ‘ packing expenses on sales’ in final accounts?
Ans. It is an indirect expense, therefore, it should be shown in the Profit & Loss Account.

Adjustments at a Glance

Sl No.
Adjustments
Adjustment Entries
Treatment in Final Accounts
1.
Closing Stock
Closing Stock A/c Dr. To Trading A/c

a. Credit side of Trading A/c.
b. Show on the assets side of B/S
2.
Outstanding or unpaid expenses
Expenses A/c Dr. To Outstanding exp.
a. Add to the concerned item on the Debit side of Trading/Profit & Loss A/c.
3.
Prepaid expenses (or Unexpired expenses)
Prepaid Expenses A/c Dr. To Expenses A/c
a. Deduct from the concerned expenses on the debit side of Profit & Loss A/c.
b. Show on the assets side of B/s.
4.
Accrued income
Accrued Income A/c Dr. To Income A/c
a. Add to the concerned income on Credit side of Profit and Loss A/c.
b. Show on the assets side of B/S.
5.
Unearned Income (Income received in advance)
Income A/c Dr. To Unearned Income A/c
a. Deduct from the concerned income on the credit side of Profit & Loss A/c.
b. Show on the liabilities side of B/S.
6.
Depreciation
Depreciaton A/c Dr. To Asset A/c
a. Show on the debit side of Profit & Loss A/c.
b. Deduct from the concerned asset in the Balance Sheet.
7.
To write off bad debts
Bad Debts A/c Dr. To Debtors A/c
a. Debit side of P & L A/c.
b. Deduct from debtors on the assets side of B/S.
8.
Provision for bad and doubtful debts
P & L A/c Dr. To Provision for Bad Debts A/c
a. Debit side of P & L A/c.
b. Deduct from debtors on the assets side of B/S
9.
Provision for discount on debtors
P & L A/c Dr. To Provision for Discount on Debtors A/c
a. Debit side of P & L A/c.
b. Deduct from debtors on assets side of B/S.
10.