Damask Traders trades in roses. The business is owned by Rose Nasrin and started trading recently and on 1 September 2021, the following balances appeared in the trial balance. Capital R25 000 Bank (unfavourable) R4 000 Inventory R37 000 Loan R5 000 Sales R11 000 Cost of sales R8 000 Damask is not registered for VAT, uses a perpetual inventory system and entered into the following transactions during September 2021. Date Details 1 Sold some roses, with a cost price of R12 000 for R18 000. Customer paid in cash. 2 Paid rent for the premises via EFT, R6 000. Purchased some equipment on credit from Pavlon suppliers, R9 000 25 Paid the newly employed nursery manager her monthly salary, R6 500. 30 The bank statement reflected bank charges of R50, interest on the overdraft of R14 and interest on the favourable balance of R3 for the month. Required: Calculate Rose Nasrin's equity in her business on 30 September 2021, by calculating the opening balances and showing the effect of each individual transaction on the accounting equation. Clearly indicate whether the account will be debit/credited when analysing the transactions. Example: Owner deposit R5 000 directly into the bank account as additional capital contribution. Date Assets = Owner's Equity Liabilities e.g. Dr Bank Cr Capital +5 000 +5 000
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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