why the adjustment entries are recorded in profit&loss account as well as in balance sheet?

Question

Answer

Based on Dual entery concept As every Financial transaction have dual effect

Answer

as per concept of dual aspect these shoud base on it....

Answer

Because adjustment entry 's are analyse after preparation of trial balance.

Answer

The adjustment entries are recorded in the profit and loss account (income statement) to ensure that the financial statements reflect the true financial position and performance of the company. These entries are made to correct any errors or omissions in the accounting records, to recognize revenues and expenses in the appropriate accounting period, and to comply with accounting principles and standards.

Recording adjustment entries in the profit and loss account helps in presenting an accurate picture of the company's profitability. It ensures that all revenues and expenses are properly recognized and allocated to the relevant accounting periods. By adjusting the profit and loss account, the financial statements provide a more reliable representation of the company's income and expenses, which is important for decision-making by stakeholders such as investors, lenders, and management.

Additionally, recording adjustment entries in the profit and loss account allows for transparency and accountability in financial reporting. It provides a clear audit trail of all adjustments made, ensuring that any changes to the financial statements can be easily traced and understood. This enhances the credibility and reliability of the financial statements, as it demonstrates that the company is following proper accounting practices and disclosing all necessary information.

In summary, adjustment entries are recorded in the profit and loss account to ensure the accuracy, reliability, and transparency of the financial statements, and to provide a true and fair view of the company's profitability.

Similar CA Foundation Doubts

If a firm prefers Partners’ Capital Accounts to be shown at the amount introduced by the partners as capital in firm then entries for salary, interest, drawings, interest on capital and drawings and profits are made in

Shri patil bansali submitted to you the following trial balance,which he has not been able to agree. Rewrite the trial balance and prepare trading and profit and loss account for the year ended 31.12.2020 and a balance sheet as on that date after giving effect to the undermentioned adjustments?

Top Courses for CA FoundationView all

Quantitative Aptitude for CA Foundation

Principles and Practice of Accounting

Business Laws for CA Foundation

Business Economics for CA Foundation

Mock Tests & Past Year Papers for CA Foundation

Top Courses for CA Foundation

Top Courses for CA Foundation

Suggested Free Tests

Related Content

CA Foundation Courses

Other Courses

How To Prepare?

Other Exams

Company