Asila, a small investor, has 2000 rials to invest. She has three choices, namely Bank Muscat, Bank Dofar, and Oman Arab bank stocks, but she want to invest in only one stock. She estimated that, if her 2000 rials were invested in Bank Muscat and a strong bull market developed by the end of the year, the value of her stock expected to be double to 4000 rials. However, if there were a bear market, the value could conceivably drop to 1000 rials by the end of the year. Her predictions regarding the value of her 2000 rials investment for the three stocks for a bull market and for a bear market are shown in the table below along with the chance for bull market. Stocks Bull Market Bear Market Chances of bull market S2 Bank Muscat 4000 1000 0.6 Bank Dofar 4500 800 0.65 Oman Arab bank 5000 100 0.55 Draw a decision tree, and suggest the suitable stock for Asila.
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.
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