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Financial Statements With Adjustments
Updated On : May 20, 2023
Financial Statements with Adjustments is one of the important topics in unit 3 of class 11th Accountancy syllabus. This unit holds 25% of the overall weightage in the question paper.
In order to understand the chapter in-depth and know what type of questions can be asked, we have explained completely about this chapter in this post. Read the complete post to know the previous year's questions asked, important concepts, and more.
What is Adjustment in Financial Statement?
Every company prepares a Profit & Loss Account and Trading account (also known as an income statement) and Balance Sheet statement(position statement) every financial year. The income statement indicates the net profit and loss status of a company, whereas, the balance sheet indicates the financial position of the business.
All these statements are provided according to the trial balance record. During the preparation of these accounts, we come across a few accounts or transactions are Omitted from the record book, or Sometimes have been recorded wrongly in the book or Sometimes entered only one part of the transactions.
Entries passed for such financial transactions are known as adjustment entries.
Previous Year Questions from Financial Statements With Adjustments
Here are few questions asked in the previous year's board exams. You can try answering these questions and check the answers from the PDF provided below.
Also, ensure to solve more and more 11th Accountancy Question Papers for enhancing preparation levels.
1. On which side of the balance sheet are prepaid expenses shown?
2. Following information is given in trial balance
| Bad debt | Rs 3,000 |
| Provision for bad debts | Rs 3,500 |
| Debtors | Rs 40,000 |
Additional information
It is desired to make a provision for doubtful debts @ of 10% on debtors. The amount debited to the profit and loss account is.
3. Is a provision for discounts on debtors made before making provision for doubtful debts?
4. While Preparing final accounts, what treatment is made of prepaid expenses?
5. Extract of Trial Balance as of 31st March, 2013
| Name of Accounts | Debit Balance(Rs) | Credit Balance(Rs) |
| Wages Paid | 66,000 | |
| Salary Paid | 16,500 |
Additional Information
Wages Rs 6,000 and salary Rs 1,500 are outstanding. Pass an adjusting entry and show how will this appear in final accounts.
6. Why is it necessary to record the adjusting entries in the preparation of final accounts?
7. Extract of Trial Balance as on 31st March, 2013
| Name of Accounts | Debit Balance(Rs) | Credit Balance(Rs) |
| Bad Debts | 1,600 | |
| Provision for doubtful Debts(1st April, 2012) | 5,000 | |
| Debtors | 1,60,000 |
Additional Information
Create a provision for doubtful debts @ 5% on debtors.
Pass necessary adjustment entries and show how will it appear in the financial statements of company.
8. From the following balances obtained from the accounts of Mr. Ranjeet, Prepare the Trading and Profit & Loss Account:
| Particulars | Rs. | Particulars | Rs. |
| Stock on April 01, 2012 | 8,000 | Bad debts | 1,200 |
| Purchases for the year | 22,000 | Rent | 1,200 |
| Sales for the year | 42,000 | Discount (Dr.) | 600 |
| Wages | 2,500 | Commission paid | 1,100 |
| Salaries & Wages | 3,500 | Sales Expenses | 600 |
| Advertisement | 1,000 | Repairs | 600 |
Closing stock on March 31, 2013, is Rs. 4,500.
Check: Class 11 Accountancy Sample Papers
9. From the following balances, prepare the final accounts of M/s Mangal & Sons for the year ended 31st March 2018 :
| Rs. | |
| Opening Stock | 12,500 |
| B/R | 2,000 |
| Sales | 70,000 |
| Purchases | 37,500 |
| Creditors | 20,000 |
| Salaries | 3,850 |
| Insurance | 200 |
| Debtors | 32,500 |
| Carriage | 1,450 |
| Commission | 750 |
| Interest | 900 |
| Printing | 250 |
| B/P | 3,150 |
| Returns in | 1,300 |
| Returns out | 500 |
| Bank | 5,250 |
| Rent and Taxes | 1,300 |
| Furniture | 1,000 |
| Capital | 7,100 |
Closing Stock on 31-3-2018 Rs.15,000
10. Suresh started buisness on 1st April, 2013 with a capital of Rs 30,000. The following trial balance was drawn up from his books at the end of the year.
Check: Class 11 Accountancy Syllabus PDF Download
| Name of Accounts | Amt(Rs) | Name of Accounts | Amt(Rs) |
| Drawings | 4,500 | Capital | 40,000 |
| Plant and fixtures | 8,000 | Sales | 1,60,000 |
| Purchases | 1,16,000 | Creditors | 12,000 |
| Carriage inward | 2,000 | Bills payable | 9,000 |
| Wages | 8,000 | - | - |
| Return inward | 4,000 | - | - |
| Salaries | 10,000 | - | - |
| Printing | 800 | - | - |
| Advertisement | 1,200 | - | - |
| Trade Charges | 600 | - | - |
| Rent | 1,400 | - | - |
| Debtors | 25,000 | - | - |
| Bills Receivable | 5,000 | - | - |
| Investments | 15,000 | - | - |
| Discount | 500 | - | - |
| Cash at bank | 16,000 | - | - |
| Cash in hand | 3,000 | - | - |
| 2,21,000 | 2,21,000 |
Check: Financial Accounts Problems for Class 11
The value of stock as at 31st March, 2014 was Rs 26,000. You are required to prepare his trading and profit and loss account for the year ended 31st March, 2014 and a balance sheet as on the date after taking the following facts into account.
- Interest on capital is to be provided at 6% per annum.
- An additional capital of Rs 10,000 was introduced by Suresh on 1st October, 2013.
- Plant and fixtures are to be depreciated by 10% per annum.
- Salaries outstanding on 31st March, 2014 amounted to Rs 500.
- Accrued interest on investment amounted to Rs 750.
- Rs 500 are bad debts and provision for doubtful debts is to be created at 5% on the balance of debtors.
