a)

Closing Stock: The stock of unsold goods lying in the warehouse is

called closing stock or value of unsold goods lying in the godown at the
end of accounting period is known as closing stock. If closing stock is
known in the adjustments it is to be recorded twice.

b)

Outstanding expenses: The expenses which are not yet paid arte
called outstanding expenses or the expenses of any nature remained
unpaid at the end of accounting period are called outstanding expenses. If
outstanding expenses are given in the adjustments but not in trial balance
we have to show double effect. Outstanding expenses given in trial
balance are to be recorded only on liability side of balance sheet.

c)

Prepaid Expenses: Prepaid means paid in advance. Certain

expenses are paid in advance by trader before its due date. If prepaid
expenses are given in trial balance than it is to be recorded on asset side
separately as prepaid expenses. If prepaid expenses are given in the
adjustments than we have to show double effects.

d)

Income Received in Advance: Sometimes a businessman or trader

receives an income for the services but the service is not rendered by him.
For such services, an income received for such services are treated as
income received in advance. This income received is treated as a liability.
For such adjustments income received in advanced is to be reduced from
the income account from profit and loss account credit side and the
second effect is to be recorded to liability side of balance sheet.

e)

Outstanding income or incomes Due but Bot Received: These are

the incomes actually earned by trader but not received from the party
during an accounting period. For presenting the true, fair factual position
of the trader he has to make adjustments for such incomes in the final
accounts.

f) Depreciation On assets: Fixed assets like plan, machinery, building,

furniture and fixture, patents, motor car are purchased by the
businessman for long run. He has to depreciate if at a fixed rate.
Depreciation means decline in the value of asset due to wear and tear or
depreciation means reduction in the value to quality and quantity of fixed
assets. Due to depreciate it at a fixed rate.