Comments

Many candidates attempted this question but the performance was below average. A good number of them were incorrectly writing on the meaning of the items.

Some of the suggested answers were:

1. End of year adjustments are amendments made in the books of account at the end of an accounting period in order to match revenue with expenses.



OR




End of year adjustments are amendments made for business transactions which have not been included in the accounting records of a business at the end of an accounting period.


OR



End of year adjustments are journal entries made in the account of a business prior to the preparation of final account for a given period.



2. 1. The following items are treated in the final accounts as follows:
   
   
   The following items are treated in the final accounts as follows:
   
   1. Provision for doubtful debts: it is posted to the debit side of profit and loss account and deducted from the debtor’s figure in the balance sheet.
   
   
   2. Prepaid rent: it is deducted from the amount of rent debited to the profit and loss account and recorded under current asset in the balance sheet.
   
   
   3. Depreciation of fixed assets: it is posted to the debit side of profit and loss account and deducted from the cost of the fixed assets to arrive at net book value in the balance sheet.
   
   
   4. Accrued income: it is added to the income value on the credit side of profit and loss account and classified under current asset in the balance sheet.