adjustment accounts
TRANSCRIPT
Presentation Of Adjustment Accounts
M.com
By
HASSAN ALI
WHAT IS ADJUSTMENT
Prepayment/Advance Payment Advance Revenue Accrued /Due Expenses Accrued Revenue
That transaction which affect two or more accounting period requires adjustment.
Types Of Adjustment
Type Of Adjustment Account
Expenses paid in cash and recorded as asset before they are used or consumedExample Of Prepayment
On 01-11-2010 , Rent paid Rs.6000 for six months01-11-2010
Prepaid Rent A/C 6000 Cash A/C 6000
31-12-2010Rent Expense A/C 2000 Prepaid Expense A/C 2000
Prepayment
Type Of Adjustment AccountAdvance Revenue
Revenue received in cash and recorded as liabilities before they are earned.
Example Of Advance RevenueOn 01-11-2010, Rent receive Rs.6000 for six months.
01-11-2010Cash A/C 6000 Unearned Rent A/C 6000
31-12-2010Unearned Rent A/C 2000 Rent A/C 2000
Type Of Adjustment AccountAccrued Expense
Taken the benefits but not yet paid in cash.
Example Of Accrued/Due ExpenseSalaries Rs.8000 due for the month of December 2010 but not paid yet.
Salaries Expense A/C 8000 Salary Payment A/C 8000
Type Of Adjustment AccountAccrued Revenue
Revenue earned but not yet received.
Example Of Accrued RevenueOn 31-12-2010, Legal fee Rs.7000 has been earned but not yet receive.
Legal Fee Receivable A/C 7000 Legal Fee Revenue A/C 7000
Thank You