ETB Adjustments

Hi All

please could someone help me with the ETB i am finding it hard to remember what happens to the figures in the trial balance when you have a figure in the adjustments colum next to it, Do you add or subtratc the figure??

And also is there a wayo to rember what goes on what side of SOPL & SOFP......


I have my AP1 exam in two weeks and what to get it right.:001_smile:

Cheers

Comments

  • liam89liam89 Feels At Home Posts: 27Registered
    Hi Matthew,

    The adjustments column is pretty much exactly what it says on the tin! It is adjusting the original figure shown. So if a £200 CR adjustment is shown in the 'Sales' row, you need to add £200 to the credit amount shown in Sales.

    If the adjustment in this particular instance is a debit, then you would reduce the credit amount shown in the Sales row by £200 (as this is reducing the amount of Sales made for the year)

    Then, the original figure along with any adjustments made to it is what is posted to the Statement of Profit or Loss OR the Statment of Financial Position. Where it is posted depends on the type of account it is. Accounts relating to this financial year are posted to the Statement of Profit or Loss (showing the performance for this year - so things such as Sales, Motor Expenses, Purchases etc...) For which sides to put them to, just think that anything increasing the profit for the year is posted as a credit and anything reducing the profit is posted as a debit.

    Accounts relating to what the company owes and what it is owed (what we know as Assets and Liabilities) are posted to the Statement of Financial Position. Things the company owns or are due to receive (such as the Trade Debtors) are posted as a debit, and things the company owes are posted as a credit.

    I hope that helps :)
  • matthew keatingmatthew keating New Member Posts: 14Registered
    Hi Liam

    Thanks for the explanation, what if the an amount of £200 is under wages Dr in the TB and say £50 is in adjustments in the Dr colum?

    thanks again
  • amurrayamurray Feels At Home Posts: 213Registered, AATQB
    Good luck with your AP1 Exam Matthew, Have my ACPR exam on Thurs!!

    Nice Explanation Liam! Cheers :)
    AATQB, FIAB.
    *MAAT hopefully to follow soon!
  • liam89liam89 Feels At Home Posts: 27Registered
    Matthew,

    Your adjustments column shows that there is a debit amount of £50 which needs to be added to the original £200 debit entry.

    If you work from left to right in each row, you will be able to figure out what to do for each figure. If the first column shows a debit amount of £200 and the adjustments column shows £50 in the debit column, then there is now £250 (£200 + £50) to post in the Statement of Profit or Loss OR Statement of Financial Position. If there was a credit entry of £50, then the amount to post to the SOPL or SOFP would be £150 (£200 original entry minus the £50 credit which is reducing this debit amount).

    Is that clearer now? Let me know if not and I'll have a go at explaining it better! End of the week and my brains a bit fried!





  • matthew keatingmatthew keating New Member Posts: 14Registered
    Liam Thanks for the explanation, so am I right thinking that any figure in ADJ Dr you add and in ADJ Cr you minus??
  • CeeJaySixCeeJaySix Well-Known Posts: 645Registered
    Not quite - it depends on what was in the first set of columns. If the original entry is a debit and the adjustment is a debit, add together to give a total debit. If they're both credits, add together to give a total credit. If they're different, subtract the adjustment from the original column, and the answer will be the same (dr/cr) as the original column (unless you've now got a negative number, in which case it switches sides!).

    Make sense?

    If it helps try thinking of the dr column as positive and the credit column as negative. Adding two positive numbers gives a bigger positive. Adding two negatives gives a bigger negative. Taking a positive and adding a negative either gives a smaller positive or a smaller negative depending on which is bigger.
  • matthew keatingmatthew keating New Member Posts: 14Registered
    HI CeeJay

    Thanks that helps alot great way to explain it.

    Cheers
  • amurrayamurray Feels At Home Posts: 213Registered, AATQB
    Thanks guys, I found this helpful!
    AATQB, FIAB.
    *MAAT hopefully to follow soon!
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