Final Accounts End Year Adjustments

Year-End Adjustments for Expenses and Revenue (Accrual Concept) In preparing final accounts, year-end adjustments ensure the accurate matching of income and expenses to the period they relate to, following the accrual concept of accounting. Revenue Adjustments: Accrued Revenue: Income earned but not yet received by the end of the year is recognized as accrued revenue and included in the current year’s revenue. Deferred Revenue: Income received in advance for services or goods to be delivered in future periods is recognized as a liability and excluded from the current year’s revenue. Expense Adjustments: Accrued Expenses: Expenses incurred but not paid by year-end are recorded as liabilities and recognized in the current year’s accounts. Prepaid Expenses: Payments made for expenses relating to future periods are treated as assets and excluded from the current year’s expenses. These adjustments ensure compliance with the matching principle, providing a true and fair view of the financial performance and position of the organization.