QUESTION 1 Spiritual Intercessors Ministry (SIM) Ltd sells A4 sheets which are received from the wholesaler at different prices. The company issues the A4 sheets directly from stores to customers. The following are the details of A4 sheets received and issued to customers during the month of December, 2018. Date (2018) Receipts Issues Dec. 1 200 boxes at GHS 10 each Dec. 3 100 boxes at GHS 10.5 each Dec. 6 150 boxes at GHS 12 each Dec. 10 50 boxes at GHS 11 each Dec. 15 60 boxes at GHS 13 each Dec. 17 120 boxes at GHS 11.5 each Dec. 20 80 boxes at GHS 12 each Dec. 21 280 boxes at GHS 15 each Stock was taken on 22nd December, 2018. Required: a) Write up the store ledgers, and prepare a statement of gross profit under the following pricing methods: i) First in, First Out (FIFO) ii) Last in, First Out (LIFO) b) With the statements prepared in (a) above, outline two advantages and disadvantages each for valuing stock using the LIFO and the FIFO approaches.
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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