SUMMARY OF POST-TRIAL BALANCE ADJUSTMENTS IN THE FINANCIAL STATEMENTS

Tutorial Points to Note:

 All footnotes will affect at least two items in the final accounts (financial statements). In most
instances, one effect will be in the Income Statement, and the other in the Statement of
Financial Position

 The items in the Income Statement relate to the period under review only (hence the heading:
Income Statement for the period ended ...)

 The Statement of Financial Position shows the assets, liabilities and equity of the firm at a given
point in time. Therefore the items in this statement represent balances in the respective
accounts as at the date of the statement.

Treatment in Statement of
Financial Position
Adjustments Treatment in Income Statement

Accrued Expenses Add to the amount paid Show the amount accrued
as a current liability

Prepaid Expenses Deduct from the amount paid Show the prepaid amount
as a current asset

Accrued Revenues Add to the amount received Show the accrued amount
as a current asset

Prepaid Revenues Deduct from the amount received Show the prepaid amount
as a current liability

Depreciation for the year Show among expenses Deduct total depreciation
from cost of fixed asset to
arrive at net book value

Increase in Provision for Bad Debts Show the amount of the increase Deduct total provision from
as an expense debtors

Decrease in Provision for Bad Debts Show the amount of the decrease Deduct total provision from
as revenue debtors