Financial Statements - II — Chapter Summary

Profit for an accounting year

Profit for an accounting year is not based on cash received and cash paid alone. Adjustments are required because some items relate partly to another

Closing stock is the cost

Closing stock is the cost of unsold goods lying in the stores at the end of the accounting period. It is credited to the trading and profit and loss a

Outstanding expenses are expenses of

Outstanding expenses are expenses of the current period that remain unpaid at the end of that period. They are added to the related expense in the pro

Prepaid expenses are expenses paid

Prepaid expenses are expenses paid in advance whose benefit will be received in the next accounting period. They are deducted from the concerned expen

Accrued income is income earned during

Accrued income is income earned during the current year but not yet received. It is added to the related income in the profit and loss account and sho