PREPARATION OF FINAL ACCOUNT

is paid in April 2026.

is drawn purely from the 'Rent Paid' ledger balance, the March rent will be missing — profit will be overstated.

Particulars: Rent Paid A/c …….. Dr. To Rent Payable A/c (Being rent for March 2026 outstanding); Amount (₹): Dr. 50,000 Cr. 50,000

Meaning: Expenses incurred during the period but not yet paid.; Banking Example: Salary for March 2026 (₹4,00,000) earned by staff but paid only in April 2026 — debit Salary Expense, credit Salary Payable.; Adjustment Entry: Expense A/c …….. Dr. To Outstanding Expense A/c

Meaning: Expenses paid in advance that do not relate to the current period.; Banking Example: Annual insurance premium of ₹60,000 paid on 1 January 2026 — only ₹15,000 (Jan–Mar) belongs to the current year; ₹45,000 is prepaid for 2026–27.; Adjustment Entry: Prepaid Expense A/c …….. Dr. To Expense…

Meaning: Income earned in the period but not yet received.; Banking Example: Interest accrued on a fixed deposit of ₹10,00,000 @ 7% p.a. for the quarter ended March = ₹17,500 — earned but credited by the bank only on maturity.; Adjustment Entry: Accrued Income A/c …….. Dr. To Income A/c

Meaning: Income received but not yet earned — should not be taken to P&L of the current period.; Banking Example: Three months' advance rent of ₹90,000 received from a tenant on 1 March 2026 — only ₹30,000 belongs to the current year; ₹60,000 is liability.; Adjustment Entry: Income A/c …….. Dr. To…

Total selling price of goods sold and services rendered during the year, INCLUDING excise duty paid on goods sold.