Acca financial Accounting (FA) Study Text ac ca (FA)

 

 

 

 

 

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Chapter 17 

KAPLAN PUBLISHING

 

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2 

The process of preparing financial statements 

In the previous chapter we introduced the process for preparing financial 

statements: 

 

By this stage you should be familiar with the double entry bookkeeping process, 

closing off the ledger accounts and extracting a trial balance. In this chapter we 

will explore the adjustments commonly made at the end of the accounting 

period after the initial trial balance has been drafted and then look at how the 

financial statements are prepared from this information. 

3 

Adjustments to the initial trial balance 

As well as adjusting the trial balance figures for any errors identified there are 

also a number of common adjustments made at the end of the accounting 

period. These include: 

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 closing 

inventory 

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depreciation charge for the year 

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 accruals 

and 

prepayments 

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irrecoverable debts and allowances for receivables 

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 income 

tax 

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provisions and contingent liabilities, and 

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events after the reporting period. 

These adjustments need to be processed before the financial statements can 

be created. 

 

 

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