Additional material for adjustment in final accounts.
1.
Accrued/Owing/Due/Outstanding/Payable Expenses: It means expenses incurred but not yet paid
till the end of accounting period. If accrued expenses are found in adjustments, then these should
be added in particular expense given in trial balance to report expense in Income Statement. In
balance sheet amount of accrued expenses also be shown as liability. Following adjusting entry is
passed for accrued expense.
i. Particular Expense A/C
1.
2.
To Accrued Expense A/c
Accrued/Owing/Due/Outstanding/Receivable Income: It means income earned but not yet
received till the end of accounting period. If accrued incomes are found in adjustments, then these
should be added in particular income given in trial balance to report income in Income Statement.
In balance sheet amount of accrued incomes also be shown as asset. Following adjusting entry is
passed for accrued income.
i. Accrued Income A/C
1.
3.
To Particular Income A/c
Prepaid/Advance/Unexpired/Paid in advance Expenses: If prepaid expenses are found in
adjustments then these should be deducted from particular expense given in trial balance to report
expense in Income Statement. In balance sheet amount of Prepaid expenses also be shown as
asset. Following adjusting entry is passed for prepaid expense.
i. Prepaid Expense A/C
1.
4.
To Particular Expense A/c
Unearned/Prepaid/Advance Income: It means income received in advance but not yet earned till
the end of accounting period. If unearned incomes are found in adjustments, then these should be
deducted from particular income given in trial balance to report income in Income Statement. In
balance sheet amount of Unearned income also be shown as liability. Following adjusting entry is
passed for unearned income.
i. Particular Income A/C
1.
To Unearned Income A/c