Tag: accounting equations and transactions

All of the options are adjustments of financial statements and are recorded twice in financial accounting.

The Companies Act requires that every balance sheet of a company should give a true and fair view of the state of affairs of the company as at the end of the financial year and every profit and loss of a company should give a true and fair view of the profit or loss of the company for the financial year.

Adjusted purchases means opening stock plus purchases less closing stock. 

It is also known as Unearned Income and is received before the related benefits are provided. This revenue is not related to the current accounting period, for example, Rent received in advance, Commission received in advance, etc. It is a personal account and shown on the liability side of a balance sheet.

Adjusted purchases means opening stock plus purchases less closing stock. Closing stock has two effects. When one effect is included in trial balance by way of inclusion in adjusted purchases the other should also form part of trial balance.

 Outstanding expenses are recorded in books of finance at the end of an accounting period to show the true numbers of a business. The outstanding expense is a personal account and is treated as a liability for the business. It is also shown on the liability side of a balance sheet.

Adjusted purchases means opening stock plus purchases less closing stock. Closing stock has two effects. When one effect is included in trial balance by way of inclusion in adjusted purchases the other should also form part of trial balance.

An outstanding expense is a liability and shown in Balance Sheet as a liability. An outstanding expense is added to the respective expense in profit and loss account.

Outstanding expenses are those expenses which have been incurred during the current accounting period and are due to be paid, however, the payment is not made. Such an item is to be treated as a payable for the business. Examples – Outstanding salary, outstanding rent, outstanding subscription, outstanding wages, etc.

Closing stock is the unsold Goods that are remains in stores (finished goods,raw materials, work-in-process), in accounting terminology it is called as Asset. Closing stock = Opening stock + Purchases - Cost of goods sold.