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You said that there are 4 adjustments such as:
a) Prepayment and Accruals
b) Depreciation
c) Irrecoverable & Doubtful debts
d) InventoryMy questions are:
1) Are they the only 4 adjustments in this exam and real life (or there are others)?
2) Adjustments are those amount which will be calculated and adjusted at the end of the year by only the accountant?
3) These adjustments will be adjusted in our general ledgers and financial statements only (no other changes required)?
4) Bookkeeper record the transactions during the year but accountant only comes at the end of the year for preparing the financial statements?
5) Accountant first make adjustments then balance-off then close-off the accounts in this sequence (correct?)
6) Do we show the brought forward balance on SOPL account because it is made only once a year (correct?)
Thanks so much for your HELP!!! 🙂
1. There are only the four standard adjustments. Obviously adjustments will also be made to correct any errors that may ve been made during the year.
2. Who makes the adjustments is up to the company but it will certainly be under the instructions of the accountant.
3. Adjustments in the general/nominal ledger will automatically change what appears in the financial statements. There is nowhere else that anything could be adjusted.
4. It depends on the size of the company how many people are involved. Recording the transactions during the year is bookkeeping whoever is actually doing it. Preparing the statements at the end of the year is the accounting function whoever is actually doing it.
5. Yes
6 No. We recording the SOPL the income and expenditure during the year (and the figures come from the t-accounts in the general/nominal ledger).
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I have questions related to my previous questions.
1) Are they the only 4 adjustments in real life too (or there are more in real life)?
6) In SOPL Account you showed the Balance b/f at the credit side whenever there is a profit.
AND Balance b/f at the debit side whenever there is a loss. (correct?)
1. I have answered you in the first answer in my previous email.
6. We credit the SOPL when there is income. The final balance will represent profit if it is a credit balance and a loss if it is a debit balance.
I have asked you several times – why are you so bothered about this given that you cannot be asked to write up t-accounts in the exam? It is a financial accounting exam, not a bookkeeping exam!
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