Adjustment of Manager's Commission in Final Accounts (Financial Statements) Last Updated : 21 Apr, 2025 Comments Improve Suggest changes Like Article Like Report The manager may be paid a commission due to an increase in sales of the business. This commission is paid on the net profit of the company. There can be two instances i.e. it can be paid before or after charging a commission. Adjustment:A. If Manager’s Commission is given outside the trial balanceIn such case, two effects will take place:Shown on the Dr. side of the Profit & Loss A/c.Shown as an Outstanding Liability on the Liabilities side of the Balance Sheet.B. If Manager’s Commission is given inside the trial balanceIt will only be shown on the Dr. side of the Profit & Loss A/c.Illustration:Following is the trial balance of Mr. Rajan.The following adjustments were noted:The manager is entitled to commission @10% on net profit before charging such commission.Goods to be used in business amounting to ₹10,000.Out of the total Advertisement expenditure incurred, only ₹4,000 belongs to the current year.Goods are sent to customers on a sale or return basis at cost plus 25% profit, the cost is ₹10,000.Goods in transit costs ₹2,000.Closing stock ₹4,500 to be taken into account.Prepare Trading A/c, P & L A/c, and Balance sheet.Solution:Note: Contingent Liability will not be taken into account in the Balance sheet. It will be shown in Notes to Account.Working Notes:1. Calculation of Manager's CommissionManager's Commission = Profit~before~charging~commission\times\frac{10}{100}= 14,000\times\frac{10}{100}=1,400 Comment More infoAdvertise with us S sukantkumar Follow Improve Article Tags : Accountancy Commerce Commerce - 11th Similar Reads Adjustment of Closing Stock in Final Accounts (Financial Statements) Value of unsold goods at the end of an accounting period is recorded as closing stock. Stock is the sum total of all the inventory of products or materials that a company holds for sale or production. The valuation of closing stock is reckoned on the base of its cost price or the realisable value, w 2 min read Adjustment of Outstanding Expenses in Final Accounts (Financial Statements) Outstanding expenses refer to those expenses which relate to the current accounting period but have not been paid so far. These expenses lead to an increase in liability for a firm. 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