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A Refresher in Financial Accounting by Faisal Sheikh

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CHAPTER 3

Major Adjustments

The starting point for calculating or understanding any adjustments is the trial balance, which is a summary of “T” accounts that are underpinned by double entry bookkeeping. You will have studied double entry, but for most accounting students it is difficult to remember as they are not practicing accountants. Instead, in the following examples and in the case studies, we begin from the trial balance and examine the impact of the adjustments on the financial statements.

Before the financial statements for the year end can be prepared, some year-end adjustments will need to be made. These year-end adjustments are required in order to satisfy the accruals concept in the preparation of financial statements. The accruals ...

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