1- The first transaction means that Safia (the owner) entered a capital of $ 10,000 in cash to start the business. An asset (cash) column is created to record this transaction. The effect of the deal is that the assets and equity will increase by $ 10,000 2- The second transaction states that the goods were purchased on credit from Anees (creditor / supplier). The effect will increase the business assets (stocks) as well as liabilities (creditor) by $ 300 because the company owes the money to Anis. 3- Salaries are work expenses, When the cash
The Effect Of Prepaid Taxes On Assets And Liabilities
Many businesses estimate tax liability and make payments throughout the year (often quarterly). When a company overestimates its tax liability, this results in the business paying a prepaid tax. Prepaid taxes will be reversed within one year but can result in prepaid assets and liabilities.
Final Accounts
Financial accounting is one of the branches of accounting in which the transactions arising in the business over a particular period are recorded.
Ledger Posting
A ledger is an account that provides information on all the transactions that have taken place during a particular period. It is also known as General Ledger. For example, your bank account statement is a general ledger that gives information about the amount paid/debited or received/ credited from your bank account over some time.
Trial Balance and Final Accounts
In accounting we start with recording transaction with journal entries then we make separate ledger account for each type of transaction. It is very necessary to check and verify that the transaction transferred to ledgers from the journal are accurately recorded or not. Trial balance helps in this. Trial balance helps to check the accuracy of posting the ledger accounts. It helps the accountant to assist in preparing final accounts. It also helps the accountant to check whether all the debits and credits of items are recorded and posted accurately. Like in a balance sheet debit and credit side should be equal, similarly in trial balance debit balance and credit balance should tally.
Adjustment Entries
At the end of every accounting period Adjustment Entries are made in order to adjust the accounts precisely replicate the expenses and revenue of the current period. It is also known as end of period adjustment. It can also be referred as financial reporting that corrects the errors made previously in the accounting period. The basic characteristics of every adjustment entry is that it affects at least one real account and one nominal account.
![What is the equation budget for each of the following
1- The first transaction means that Safia (the owner)
entered a capital of $ 10,000 in cash to start the
business. An asset (cash) column is created to record
this transaction. The effect of the deal is that the
assets and equity will increase by $ 10,000
2- The second transaction states that the goods were
purchased on credit from Anees (creditor / supplier).
The effect will increase the business assets (stocks)
as well as liabilities (creditor) by $ 300 because the
company owes the money to Anis.
3- Salaries are work expenses. When the cash
repayment is made, the asset (cash) will be reduced
and the equity (equity) also becomes lower by $ 3000
due to this cash advance.
4- Borrowing is like a bank loan, as the business needs
money in its operations. The effects of this transaction
are that the assets (cash) and liabilities column (bank
loan) are also increased by $ 2000.
5- The cash column will include when the company
purchases $ 1000 cash goods, it serves as inventory for
resale to customers. The asset (cash) will increase and
the asset (the inventory) will decrease by $ 1,000 due to
this transaction.
6. In this transaction, $ 300 worth of items were sold to
Ana on credit terms. The effects will be the depreciation
of the asset value (owner's equity). 300 dollars.
7- When the owner repays part of the loan that the
company borrows from the bank, the columns of assets
(cash) and liabilities (bank loan) can be deducted by
$ 1,000. There is no influence on the capital (equity)
column of this transaction.
8- The transaction by the company will be a withdrawal
that affects the capital (equity) of the owner. The
Cash & Capital column will decrease by $ 500 due to
withdrawal. Recorded business transactions affecting
the assets, liabilities and capital of the company must
be finalized.
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