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Year-end adjustments

The entries that turn a year of bookkeeping into accounts: accruals, prepayments, depreciation, disposals, doubtful debts, inventory and the extended trial balance.

Hard6 of 6 modules open29 rooms
Module 1

Accruals and prepayments

Put each cost and each piece of income into the year it belongs to, with the year-end adjustments and the journals behind them.

  1. 1The accruals idea: match costs to the year8 min, medium
  2. 2How to record an accrued expense8 min, medium
  3. 3How to record a prepaid expense8 min, medium
  4. 4Accrued and deferred income10 min, medium
  5. 5Reversing last year's adjustments12 min, hard
Recap this moduleSix questions, starting with the ones you got wrong.
Module 2

Depreciation

Share the cost of an asset over the years it is used: straight line, reducing balance, part years and the year-end journal.

  1. Why assets are depreciated7 min, mediumPremium
  2. How to work out straight line depreciation9 min, mediumPremium
  3. How to work out reducing balance depreciation9 min, mediumPremium
  4. Depreciation for part of a year10 min, hardPremium
  5. The journal for depreciation9 min, mediumPremium
Module 3

Non-current assets

Buying, tracking and selling the assets a business keeps for years: capital expenditure, the asset register, disposals and part exchange.

  1. Capital or revenue expenditure10 min, mediumPremium
  2. The non-current asset register10 min, mediumPremium
  3. How to record the disposal of an asset12 min, hardPremium
  4. Part exchange: trading in an old asset12 min, hardPremium
  5. Authorising and paying for an asset9 min, mediumPremium
Module 4

Irrecoverable debts

Some customers never pay and some might not. Write off the lost debts, allow for the doubtful ones, and show receivables at what will be collected.

  1. How to write off a debt at the year end7 min, mediumPremium
  2. What the allowance for doubtful debts is8 min, mediumPremium
  3. How to change the allowance for doubtful debts10 min, hardPremium
  4. A written-off debt is paid after all7 min, mediumPremium
  5. Receivables in the year-end accounts10 min, hardPremium
Module 5

Inventory at the year end

Count what is left, value it at the lower of cost and net realisable value, put it into the books, and use it to find the cost of goods sold.

  1. How to count inventory at the year end7 min, mediumPremium
  2. Cost or net realisable value: which to use9 min, mediumPremium
  3. How to write the closing inventory journal8 min, mediumPremium
  4. How to work out cost of goods sold9 min, mediumPremium
Module 6

The extended trial balance

One worksheet takes the trial balance through the year-end adjustments to the profit for the year. Learn each pair of columns, then do a whole one.

  1. How the extended trial balance is laid out7 min, mediumPremium
  2. How to fill in the adjustments columns9 min, mediumPremium
  3. Extending to profit or loss and financial position9 min, hardPremium
  4. How to find the profit or loss for the year10 min, hardPremium
  5. A whole extended trial balance, start to finish12 min, hardPremium