Listed below are ten business transactions for Puring Company during its first month of operations: Owner invested cash in the business amounting to P300 000 Purchased equipment for cash amounting to P50 000 Purchased inventories through credit amounting to P35 000 Purchased furniture amounting to P30 000. Made partial payment with cash (P10 000) and incurred an accounts payable for the balance (P20 000) Paid cash to the local government for business permit (P9 000) Made sales of P17 000 - P12 000 cash sales, P5 000 credit sales. The cost of the sales made in (f) amounted to P8 500. Paid the accounts payable in (d) Collected P2 500 out of the P5 000 credit sales in (f) Paid employee P12 000 Indicate the effects of the given transactions on each of the financial statement elements in the table shown below. The answer for transaction (a) is given as an example:
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.
Listed below are ten business transactions for Puring Company during its first month of operations:
- Owner invested cash in the business amounting to P300 000
- Purchased equipment for cash amounting to P50 000
- Purchased inventories through credit amounting to P35 000
- Purchased furniture amounting to P30 000. Made partial payment with cash (P10 000) and incurred an accounts payable for the balance (P20 000)
- Paid cash to the local government for business permit (P9 000)
- Made sales of P17 000 - P12 000 cash sales, P5 000 credit sales.
- The cost of the sales made in (f) amounted to P8 500.
- Paid the accounts payable in (d)
- Collected P2 500 out of the P5 000 credit sales in (f)
- Paid employee P12 000
Indicate the effects of the given transactions on each of the financial statement elements in the table shown below. The answer for transaction (a) is given as an example:
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P300 000 |
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P300 000 |
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