• I received my mobile phone bill last Friday (4 th
January 2013). The date on the bill was 25 th
November – 24 th December 2012. I will pay the bill this week.
• I am unsure if I should put this in my expenses for 2012 or 2013.
• What do you think?

nd
Adjustments to the Final Accounts
7 th January 2013

• Sometimes bills or other expenses don’t get paid immediately when owed (e.g. mobile phone bill)
• If an amount hasn’t been paid, then that means it won’t have been entered into the expense account
• When preparing final accounts for a year, we must include all income and expenditure that belongs to that year
• The changes we must make are called adjustments to the accounts

• Any adjustment you make to a gain or an expense will be entered twice
• Once in The Trading, Profit & Loss Acount
• Once in The Balance Sheet
• Why?

• 2 types:
1. Amounts due by the Firm
2. Amounts due to the Firm
Firm
Due to the
Firm
Due/Owed
By the Firm

• This is the money that the firm still owes to others at the end of the year e.g. telephone, electricity, wages etc.
• Revision: Where do we put money that the firm still owes to others?
• Step 1: Add the amount owed to the relevant expense in the Trading, Profit & Loss Account
• Step 2: Show the amount as a current liability in the balance Sheet

• Telephone……………………€2,500
• Telephone due……………….€300
Solution:
• Profit and Loss Account:
Expenses
Telephone (€2,500 + €300)………………€2,800
• Balance Sheet
Current liabilities
Telephone……………………………………………€300

• Wages……………………€6,300
• Wages due…………….€1,800
Solution:
• Profit and Loss Account:
Expenses
Wages (€6,300 + €1,800)………………€8,100
• Balance Sheet
Current liabilities
Wages due………………………………………€1,800

• This is the money that is owed to the Firm at the end of the year e.g. rent, bank interest.
• Revision: Where do we put money that the firm is owed?
• Step 1: Add the amount owed to the relevant gain in the Trading, Profit & Loss Account
• Step 2: Show the amount as a Current Asset in the Balance Sheet

• Rent Received…………………€12,500
• Rent Received due……………€1,500
Solution:
• Profit and Loss Account:
Gains
Rent Receivable(€12,500 + €1,500)……………€14,000
• Balance Sheet
Current Assets
Rent receivable due……………………………………€1,500

• Interest Received……………€1,700
• Interest Received due………€400
Solution:
• Profit and Loss Account:
Gains
Interest Receivable(€1,700 + €400)……………€2,100
• Balance Sheet
Current Assets
Interest receivable due………………………………..€400

• Question 21 page 383
• Add the following notes:
1. Rent received due at 31/12/11…….. €450
2. Wages due at 31/12/11 ………………€1,200
3. Insurance due at 31/12/11………….€1,000