Financial Statements - II
Madhya Pradesh Board · Class 11 · Accountancy
Flashcards for Financial Statements - II — Madhya Pradesh Board Class 11 Accountancy. Quick Q&A cards covering key concepts, definitions, and formulas.
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What is the need for adjustments while preparing financial statements?
Answer
Adjustments are needed because: 1) Accounting follows the accrual concept - revenues are recorded when earned (not when received) and expenses when incurred (not when paid). 2) Some expenses/incomes o…
Define Outstanding Expenses with journal entry.
Answer
Outstanding Expenses are expenses that have been incurred during the current accounting period but remain unpaid at the end of the period (e.g., wages, salaries, rent). Journal Entry: Concerned Expens…
What are Prepaid Expenses? Give journal entry and treatment.
Answer
Prepaid Expenses are expenses paid in advance where benefits will be received in the next accounting period. Journal Entry: Prepaid Expense A/c Dr. To Concerned Expense A/c. Treatment: Deducted from r…
Explain Accrued Income with example.
Answer
Accrued Income refers to income earned during the current period but not yet received. Journal Entry: Accrued Income A/c Dr. To Concerned Income A/c. Treatment: Added to respective income in P&L A/c a…
Define Income Received in Advance with journal entry.
Answer
Income Received in Advance (Unearned Income) is income received but not yet earned - portion belongs to next accounting period. Journal Entry: Concerned Income A/c Dr. To Income Received in Advance A/…
How is Closing Stock adjusted in financial statements?
Answer
Closing Stock represents unsold goods at the end of accounting period. Journal Entry: Closing Stock A/c Dr. To Trading A/c. Treatment: 1) Credited to Trading A/c (shown on credit side), 2) Shown as cu…
Calculate wages to be shown in Trading A/c: Wages paid ₹8,000, Outstanding wages ₹500.
Answer
Wages to be shown in Trading A/c = Wages paid + Outstanding wages = ₹8,000 + ₹500 = ₹8,500. Journal Entry: Wages A/c Dr. ₹500 To Outstanding Wages A/c ₹500. Outstanding wages of ₹500 will be shown as …
Calculate salary expense: Salary paid ₹25,000, includes prepaid salary ₹5,000.
Answer
Salary expense for current year = Salary paid - Prepaid salary = ₹25,000 - ₹5,000 = ₹20,000. Journal Entry: Prepaid Salary A/c Dr. ₹5,000 To Salary A/c ₹5,000. Prepaid salary of ₹5,000 will be shown a…
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