Financial Statements- Adjusting entries
• Adjusting entries are the journal entries passed at the time of
preparation of financial statements to adjust the outstanding and
prepaid expenses and income and other anticipated loss and
gains.
• Adjusting entries passed in journal Proper
• Adjusting entries are passed as per "Matching Principle"
1.Outstanding Expenses
• Outstanding expenses refer to those expenses which have
become due during the accounting period but have not yet been
paid.
• This expenses are added to concerned expenses and shown as
liability side of the Balance sheet.
• If it is appeared in the Trial balance, the amount will be shown
as a liability in Balance sheet.
Journal Entry
Expenses a/c........Dr
To Outstanding expenses
, 2.Prepaid expenses or Unexpired expenses
• Prepaid expenses are those expenses the benefits which has not
been fully enjoyed before the end of the accounting year.
• These expenses paid during the year but the benefits are yet to
come,
• This expenses are deducted from concerned expenses and shown
in the asset side of the Balance sheet.
• If it is appeared in the Trial balance, the amount will be shown
as an asset in the Balance sheet.
Journal Entry
Prepaid Expenses A/C..............Dr
To Expenses
3.Income earned but not received or Outstanding income or
Accrued income
• This is the income earned during the current year but have not
been actually received at the end of the same year.
• This income is added to concerned income in the credit side of
the P and L account and shown on the asset side of the balance
sheet
• Adjusting entries are the journal entries passed at the time of
preparation of financial statements to adjust the outstanding and
prepaid expenses and income and other anticipated loss and
gains.
• Adjusting entries passed in journal Proper
• Adjusting entries are passed as per "Matching Principle"
1.Outstanding Expenses
• Outstanding expenses refer to those expenses which have
become due during the accounting period but have not yet been
paid.
• This expenses are added to concerned expenses and shown as
liability side of the Balance sheet.
• If it is appeared in the Trial balance, the amount will be shown
as a liability in Balance sheet.
Journal Entry
Expenses a/c........Dr
To Outstanding expenses
, 2.Prepaid expenses or Unexpired expenses
• Prepaid expenses are those expenses the benefits which has not
been fully enjoyed before the end of the accounting year.
• These expenses paid during the year but the benefits are yet to
come,
• This expenses are deducted from concerned expenses and shown
in the asset side of the Balance sheet.
• If it is appeared in the Trial balance, the amount will be shown
as an asset in the Balance sheet.
Journal Entry
Prepaid Expenses A/C..............Dr
To Expenses
3.Income earned but not received or Outstanding income or
Accrued income
• This is the income earned during the current year but have not
been actually received at the end of the same year.
• This income is added to concerned income in the credit side of
the P and L account and shown on the asset side of the balance
sheet
