a) The fact that your trial balance agrees does not mean that there are no errors. Discuss b) Accounting equation is the basis for the preparation of statement of financial position in accordance to IFRS financial statement presentation. Explain c) Explain double entry in accounting and relate it to the appropriate accounting concept.
a) The fact that your trial balance agrees does not mean that there are no errors. Discuss b) Accounting equation is the basis for the preparation of statement of financial position in accordance to IFRS financial statement presentation. Explain c) Explain double entry in accounting and relate it to the appropriate accounting concept.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
- a) The fact that your
trial balance agrees does not mean that there are no errors. Discuss
- b)
Accounting equation is the basis for the preparation ofstatement of financial position
in accordance to IFRS financial statement presentation. Explain
- c) Explain double entry in accounting and relate it to the appropriate accounting concept.
2. Your uncle, Mr. Mensah is a sole proprietor dealing in building materials in Accra. His friend, Kofi Manu has convinced him to convert his sole proprietorship business into a limited liability company. Just last week your Uncle wanted a loan facility from a bank and the bank asked him to submit three years of financial statements in addition to other documents.
Having learned the definition of financial accounting and financial statements, your Uncle wants you to help him understand certain issues in accounting.
Required:
- a) Explain four disadvantages of converting the business to a private limited liability company.
- b) Referring to the definition of financial accounting explain the process that financial transactions have to go through in the preparation of financial statements.
- c) Apart from the bank that is asking your Uncle to submit financial statements, identify four other users of financial statements and explain their information needs.
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