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Accounting Test Time: Adjustments Video Lecture - Commerce
FAQs on Accounting Test Time: Adjustments Video Lecture - Commerce
| 1. What are accounting adjustments? |  |
Ans. Accounting adjustments are changes made to the financial records of a company at the end of an accounting period to ensure that the financial statements accurately reflect the company's financial position and performance. These adjustments are necessary to account for items that were not recorded or incorrectly recorded during the regular accounting cycle.
| 2. Why are adjustments necessary in accounting? | |
Ans. Adjustments are necessary in accounting to ensure that the financial statements present a true and fair view of the company's financial position and performance. They help correct errors, allocate expenses and revenues to the correct accounting period, recognize unrecorded transactions, and comply with accounting principles and standards.
| 3. What are some common types of accounting adjustments? | |
Ans. Some common types of accounting adjustments include accruals, deferrals, depreciation, bad debt provisions, inventory adjustments, and revenue recognition adjustments. Accruals involve recognizing revenues and expenses that have been earned or incurred but not yet recorded. Deferrals involve recognizing revenues and expenses that have been recorded but not yet earned or incurred.
| 4. How are accounting adjustments recorded? | |
Ans. Accounting adjustments are typically recorded by creating adjusting journal entries. These entries are made to the relevant accounts in the general ledger to reflect the necessary changes. The adjusting journal entries should include a description of the adjustment, the accounts affected, the amounts involved, and the rationale behind the adjustment.
| 5. What is the impact of accounting adjustments on financial statements? | |
Ans. Accounting adjustments have a direct impact on the financial statements. They can change the reported amounts of assets, liabilities, revenues, and expenses, which in turn affect the company's net income, equity, and financial ratios. Adjustments ensure that the financial statements provide accurate and reliable information for decision-making by stakeholders.
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Nov 08, 2024 Last updated |
Accounting Test Time: Adjustments for Commerce2024 is part of Commerce preparation. The notes and questions for Accounting Test Time: Adjustments
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