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The document contains practice examples related to accounting adjustments and ledger balances. It includes calculations for prepaid expenses, outstanding salary expenses, and inventory adjustments, illustrating the accounting equation A = L + C. Each example outlines the necessary adjustments and their impact on cash, expenses, and inventory.

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15 views2 pages

Acc

The document contains practice examples related to accounting adjustments and ledger balances. It includes calculations for prepaid expenses, outstanding salary expenses, and inventory adjustments, illustrating the accounting equation A = L + C. Each example outlines the necessary adjustments and their impact on cash, expenses, and inventory.

Uploaded by

vikas
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as TXT, PDF, TXT or read online on Scribd
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__________________Practise example 1_______________________________

Ledger balance at the end of year = 1000

40% of amount found to be paid for next year

1) What is A = L + C that the account would have passed


2) What must be done now

A = -1000
+400 (Pre paid)
L = 0

C -> Expense (Reserves) increase by 400

Actual statement

Cash -1000 (+) Prepaid Insurance +400 (=) Expense -1000 +400 i.e -600

___________________Practise Example 2_______________________________

Salary Expenses ledger balance at the end of the month is Rs. 6,000

adjustment mentioned Rs. 2,000 are still due to be paid

1) What is A = L + C that the account would have passed


2) What must be done now

1) A = +8000
L = 0
C = +8000

2) Cash -6000 (=) Outstanding +2000 (+) Expense -8000

___________________Practise Example 3_______________________________

Excerpt from list of ledgers (Trial Balance) has the following balances:

Opening Stock 1000


Purchases 5000

In the adjustments, it is mentioned that closing stock is 2500

1) What is A = L + C that the accountant passed?


2) What must be the consumption of the RM during the year
3) What amount will be taken to closing BS?

1) A = 1000 (last year inventory)

Cash -5000
Inventory +5000

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