Question 2 The Umbrella Shop has the following trial balance as at 30 September 20X8. Shs Sales Purchases 156,000 65,000 Land and buildings - carrying value at 30.9.X8 125,000 Plant and machinery - carrying value at 30.9.X8 75,000 Inventory at 1.10.X7 10,000 Cash at bank 12,000 Trade accounts receivable 54,000 Trade accounts payable 40,000 Selling expenses 10,000 Cash in hand 2,000 Administration expenses 15,000 Finance expenses 5,000 Carriage inwards 1,000 2,000 Carriage outwards 180,000 Capital account at 1.10.X7 376,000 376,000 Total The following information is available. (a) Closing inventory at 30.9.X8 is shs13,000, after writing off damaged goods of shs 2,000. (b) Included in administration expenses is machinery rental of shs 6,000 covering the year to 31 December 20X8. (c) A late invoice for shs12,000 covering rent for the year ended 30 June 20X9 has not been included in the trial balance. Prepare a statement of profit or loss and statement of financial position for the year ended 30 Seplember 20X8.
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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