Neil Patel 40068068 Unit 6 M2
M2: Assess the impact of adjustments to profit & loss account and
balance sheet items for a limited company.
Closing Stock-
Closing stock is the amount of inventory that a business still has on hand at the end of a
reporting period. This includes raw materials, work-in-process, and finished goods inventory.
In the adjustments section, the closing stock has a value of £1200 and the same is done for
the statement of profit and loss.
Also, the closing inventory featured in the statement of financial position has a debted value
of £1200 in adjustments and also in the statement of financial position.
Accruals-
Accruals are adjustments for revenues that have been earned but are not yet recorded in the
accounts, and expenses that have been incurred but are not yet recorded in the account.
The accruals are shown to have a value of £1800 in the adjustments and statement of
financial position columns. This is added in the credit section on the fifth column.
Depreciation-
Depreciation is when an asset loses value due to it being damaged or used. The longer it is
being used for the less it will be worth for example a brand new car. If a car is bought for
£15,000, as soon as you purchase and start to use this vehicle, the value of it will depreciate
due to it no longer being “new”.
In terms of the work, Depreciation is shown to have value debted of £8712 in the statement
of profit or loss column as well as the adjustment column too.
Also, the figures show that the motors have an accumulated depreciation values as credited
in the Ledger Balance as £11016 which is stated on the first column of the statement, a
value of £1712 in the adjustments column and gives the final accumulated depreciation
figure for the machinery of £12728.
Bad Debts-
Bad debts expense often refers to the loss that a company experiences because it sold
goods or services and did not require immediate payment. The loss occurs when the
customer does not pay the amount owed. In other words, bad debts expense is related to a
company's current asset accounts receivable. The Bad Debts have a value debted at a
figure of £150 in the adjustments as well as the statement of profit or loss columns which
also comes under the debit column.
Provision for Bad Debts-
M2: Assess the impact of adjustments to profit & loss account and
balance sheet items for a limited company.
Closing Stock-
Closing stock is the amount of inventory that a business still has on hand at the end of a
reporting period. This includes raw materials, work-in-process, and finished goods inventory.
In the adjustments section, the closing stock has a value of £1200 and the same is done for
the statement of profit and loss.
Also, the closing inventory featured in the statement of financial position has a debted value
of £1200 in adjustments and also in the statement of financial position.
Accruals-
Accruals are adjustments for revenues that have been earned but are not yet recorded in the
accounts, and expenses that have been incurred but are not yet recorded in the account.
The accruals are shown to have a value of £1800 in the adjustments and statement of
financial position columns. This is added in the credit section on the fifth column.
Depreciation-
Depreciation is when an asset loses value due to it being damaged or used. The longer it is
being used for the less it will be worth for example a brand new car. If a car is bought for
£15,000, as soon as you purchase and start to use this vehicle, the value of it will depreciate
due to it no longer being “new”.
In terms of the work, Depreciation is shown to have value debted of £8712 in the statement
of profit or loss column as well as the adjustment column too.
Also, the figures show that the motors have an accumulated depreciation values as credited
in the Ledger Balance as £11016 which is stated on the first column of the statement, a
value of £1712 in the adjustments column and gives the final accumulated depreciation
figure for the machinery of £12728.
Bad Debts-
Bad debts expense often refers to the loss that a company experiences because it sold
goods or services and did not require immediate payment. The loss occurs when the
customer does not pay the amount owed. In other words, bad debts expense is related to a
company's current asset accounts receivable. The Bad Debts have a value debted at a
figure of £150 in the adjustments as well as the statement of profit or loss columns which
also comes under the debit column.
Provision for Bad Debts-
