QUESTION 2 The unadjusted trial balance of Rayyan Resources (RR) Bhd based in Kuala Lumpur contained the following accounts on 31 December 2020, the end of the company's fiscal year. Accounts Credit (RM) Debit (RM) 212,300 30,500 Bank Accounts receivable Office supplies Prepaid insurance Merchandise inventory 11,500 18,000 44,700 Land 215,550 235,100 Building Accumulated depreciation-Building Store equipment Accumulated depreciation-Store equipment Delivery truck Accumulated depreciation- Delivery truck 75,000 185,350 52,000 158,150 46,000 Goodwill 62,000 Notes payable Accounts payable Unearned revenue 51,000 48,500 36,000 440,000 Ordinary share capital Capital reserves Retained earnings 65,250 225,000 39,550 Rent revenue Dividends 12,000 Sales 753,950 Sales returns and allowances 8,800 Cost of goods sold Gain on revaluation of properties 397,400 13,700 Loss on sale of land 20,400 Salary and wages expenses Advertising expenses Utilities expense Interest expense Delivery expense Repair expense Income tax expenses 140,000 24,400 14,000 20,000 16,700 12,100 7,000 Total 1,845,950 1,845,950 Additional information on 31 December 2020: 1. RR Bhd has a calendar year-end accounting period. The accounting policies related to the depreciation of the assets are as follows: NONCURRENT ASSET Depreciation Rate Building 5% per annum on cost
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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