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Closing Adjustments Notes

LPC Law Notes > Accounts Notes

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A more recent version of these Closing Adjustments notes – written by Cambridge And Oxilp And College Of Law students – is available here.

The following is a more accessble plain text extract of the PDF sample above, taken from our Accounts Notes. Due to the challenges of extracting text from PDFs, it will have odd formatting:

Core Module: Business Accounts

Business Accounts Closing Adjustments Trading Account:

1. Closing stock adjustment Profit & Loss / Balance Sheet adjustments:

1. Accrual: expense not yet received by business

2. Pre-payment: advance payment for next accounting period

3. Provision for depreciation

4. Bad debts: debt of customer is written off by business

5. Provision for bad / doubtful debts: estimate for current debtors (expressed as
% of total debtors)

6. Closing stock (balance sheet only) ENTER TWICE! BUT: Bad debt: If already entered into the trial balance, enter ONLY Expense in Profit and Loss Account. Provision for bad debt: If already entered into trial balance, enter ONLY as Trade debtors in balance sheet.

Trading, Profit and Loss Account AND CLOSING ADJUSTMENTS
Sales (- Returns inwards) LESS cost of sales Opening Stock at (date) Add: purchases (- returns outwards) Less: closing stock Plus: cost of sales Gross Profit (+ discount received) LESS Expenses Rent Repairs Wages Insurance Electricity
- Prepayments
+ Bad Debts written off
+Provision for bad debt or Doubtful Debt
+ Accruals
+ Depreciation (of x,y,x)
+ expense

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