what is the main purpose of adjusting and why we need to post it twice everytime.????????????????
what is the main purpose of adjusting and why we need to post it twice everytime.????????????????
Adjustments are done to rectify some mistakes by ommission in the accounts. Every entry affects two a/cs thas why it is posted twice.
I hope i understood your query in the sense you intended
thanks for your reply Ashish. Yes you catch my doubt. Also can u elaborate it. we are posting depreciation in p&l a/c as a revenue expenditure and at the same time we are deducting it from concerned asste. Is depreciation is an error due to omission? that is my doubt. plssss elaborate. I m not opposing ur opinion. i just want to know elaborately. sry to ask u again.
Adjustement Entries Are those Who Have Give Good Understanding .
Adjustement enties are passed for rectification in a/cs and also for adjustment of expenses which are not materialy incured during the period but are dues such as provisions for expenses or depreciation etc. Transferred entries are also adjustment entries.
All adjustment entries are done at the time of closing of books. Purpose of the entries are to identify the clear picture of accounts as on date. As concern to Depreciation, this is the method to reduce the book value of assets due to depreciation.
The expenses/Income are included in FY balances through adjustment entries and after that in next FY the same will be paid through these provisional/outstanding accounts.
Dear All
Without adjustment entries can not final Balance sheet becouse lots of entry lay on without information & same mistake so that end of the financial years made adjustment entry.
Thanks
thamks to all for ur valuable opinions
Shwetha - for that particular depreciation query
See you have to pass 2 entries for depreciation
1. Depreeciation A/c Dr.
To Asset A/c ( Being Asset depreciated)
2. Now depreciation a/c is closed and it is debited in P&L A/c by following entry
P&L A/c Dr.
To Depreciation A/c
If you pass both these entries there is no need to adjust depreciation. when you forget to charge the depreciation then only adjustment is done in P&L A/c and Balance Sheet and that adjustment is nothing but passing these entries only.
Pls give a feedback on this.
Your are not logged in . Please login to post replies
Click here to Login / Register
HKC | Chartered Accountants & Business Advisors
Ludhiana
CA
View Details
CCI
Pro
India's largest network for
finance professionals