UNIT 8 FINAL ACCOUNTS (II) INDEX
Structure
8.0 Objectives
After studying this unit you should be able to:
explain why adjustment entries are necessary at the time of preparing the final
accounts
- list the items in respect of which adjustments are usually made.
- pass the necessary adjustment entries
- prepare final accounts with adjustments.
8.1 Introduction
In Unit 7 you learnt about the preparation of simple final accounts. They did not
involve any adjustments. In practice, however, you are always required to make some
adjustments while preparing the final accounts. It is because there may be many
expenses and incomes relating to the current year which are still to be brought into the
books of account. Then there may be certain items recorded in current year's books
which actually relate to the previous year or the next year. Unless such items are duly
adjusted in the books of account, the final accounts will not reveal the true and fair
view of the state of affairs of the business. Inthis unit you will lean1 about all items
which require adjustments and study how such adjustments are made in books of
abunt and how they are incorporated in the final accounts.
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