yr11_balanceday

Balance Day Adjustments
There are 7 adjustments that you will need to know for the external examinations that will get you up to a merit or excellence. We have to make the adjustments because we follow the 'Accrual Basis' in accounting. That means that transactions and events should be recognised and reported in the financial statements of the periods to which they relate.

for example, if the end of the year falls on a Friday and the company pays its employees on a Tuesday, then there will be 3 days (Wed - Fri) just prior to the end of the year where the wage expense needs to be accounted for, even though the money hasn't been paid to the employee. In fact, it wont be paid until the following Tuesday.

So, the adjustments you will need to be familiar with are: Here is a spreadsheet for how the income statement is adjusted for __depreciation__. In order to move up to a merit, you will need to understand how to handle __depreciation__. The worksheets titled 'Regina Real Estate' and 'Fast First Couriers' will help you with understanding depreciation.
 * 1) adjust accounts receivable for sales
 * 2) adjust accounts payable for purchases
 * 3) adjust for accrued expenses (where expenses have been incurred but not yet paid in the current accounting period - like the wage example above.)
 * 4) adjust for prepayments (this is for prepaid expenses)
 * 5) adjust for accrued income (where income has been earend but not yet received in the current accounting period)
 * 6) adjust Income received in advance (a common example is rent received which people often pay in advance so the business recieves rent in advance).
 * 7) adjust for depreciation

There are two versions of this file. Some of you will have Excel 2003, some will have Excel 2007. You need to only fill in the shaded areas. Don't forget to put a title on the Income Statements. Remember, it is only 'Regina Real Estate' and 'Fast First Couriers' that have depreciation in them. Yet to be added to this site: Here are more advanced worksheet examples that you can work on. These will give help your understanding of how to handle all the different types of adjustments. Again start over on the left most tab, on the worksheet titled 'Toinis Truck Hire', then work on 'Tihoi tramping', and finally 'Petes Plumbing'.