Task 1 Hussain Co. prepared the following trial balance on 31st December 2020 before taking account of the additional information below: Hussain Co. Trial balance as on 31st December 2020 Debit Credit OMR OMR Revenue 2,070,000 Purchases 1,176,000 Building - Cost 350,000 Building - accumulated depreciation at 1 January 2020 75,000 Fixtures & fitting – Cost 386,000 Fixtures & fitting – accumulated depreciation at 1 January 2020 76,600 Land - Cost 300,000 Trade and other receivables 37,500 Trade and other payables 83,200 6% Debentures (redeemable at par on 1 September 2022) 40,000 Cash and cash equivalents 29,000 Retained earnings 72,700 Share Capital (R.0 1 shares) 420,000 Share premium 99,000 Distribution costs 276,000 Administrative expenses 289,000 Inventories as at 1 January 2020 12,000 Dividend paid for year ended December 2020 84,000 2,939,500 2,939,500
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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