accounts will not reflect the true and fair view of the

accounts will not reflect the true and fair view of the state of affairs of the business. L EARNING O BJECTIVES After studying this chapter, you will be able to : • describe the need for adjustments while preparing the financial statements; • explain the accounting treatment of adjust- ments for outstanding and prepaid expenses, accrued and advance receipts of incomes; • discuss the adjust- ments to be made regarding deprecia- tion, bad debts, provi- sion for doubtful debts, provision for discount on debtors; • explain the concepts and adjustment of manager’s commission and interest on capital; • prepare profit and loss account and balance sheet with adjust- ments.