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BTEC Unit 6 Financial Accounting P3 (Pass)
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BTEC Unit 6 Financial Accounting P3 (Pass)
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P3:Explain per adjustment why adjustments were made to this limited companies
financial statement.
In accounting adjusting entries are usually made at the end of an accounting
period to allocate income and expenditure to the period in which they actually
occurred. I am going to explain per adjustment why adjustments were made to
ABC Company`s financial statement.
Accounts receivable: accounts receivable is the amount of money which ABC
Company will receive from their customer which purchased their goods and
services on credit. The amount on the balance is £3.400 after an adjustment of
£100.00 the trial balance is £3.500 this means one of ABC Company`s customers
has placed an credit order of £100.00 making the total amount ABC Company will
receive now £3.500.
Office supplies: are the materials that are used within the office of ABC Company
during their business operations. Office supplies include; paper clips, ink, etc.
Office supplies were £1.200 on the balance after an adjustment of £300 the trial
balance for office supplies was £900. This could mean that some office supplies
were finished or couldn’t be used anymore like A4 paper, which makes the trial
balance £900.
Accumulated depreciation furniture: refers to the amount an asset depreciates in
this case it’s the furniture of ABC Company. The furniture is expected to
depreciate on £1.000 the balance after an adjustment of £500 it will depreciate
with £1.500 on the trial balance. This could mean ABC Company purchased extra
furniture that depreciated with £500 at the end of the year.
Accumulated depreciation building: refers to the amount an asset depreciates in
this case the building of ABC Company to depreciate. The building is expected to
depreciate with £100.000 on the balance after an adjustment of £10.000 the
building will depreciate with £110.000 on the trial balance. The reason why this
adjustment was made could be, because maybe a part of the building was
renovated which will make the amount on which the building depreciates
increase.
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