the following balances: Liability and Owner's Equity Accounts Payable Assets P34,000 Cash Accounts Receivable 110,000 Land Total P180,000 90,000 380,000 Cabano, Capital Total 346,000 380,000 The following accounting events apply to 2019: Jan 1. Received P100,000 additional cash investment from the owner. Jan 1. Purchased a service vehicle that cost P80,000 for cash. The vehicle has an PS,000 salvage value and a 3-yr useful life. Feb 1 Borrowed P100,000 by issuing a note that carried a 9% annual interest rate and a l-yr term. Feb 1 Paid P24,000 cash in advance for a 1-year rent for office space. Mar 1 Cabano withdrew P30,000 for emergency personal use. April 1 Acquired land that cost P70,000 cash May 1 May a cash payment on accounts payable amounting to P15,000. July 1 Received P42,000 cash in advance as retainer for services to be performed monthly over the next 12 months. Oct 1 Purchased P20,000 of supplies on account. Dec 31 Total earned service revenues (on account) for the year, P250,000 Dec 31 Total cash collections from accounts receivable amounted to P200,000. Dec 31 Incurred other operating expenses on account during the year that amounted to P80,000. Dec 31 Accrued salaries amounted to P32,000. Dec 31 P1,000 of supplies remained on hand at the end of the period.
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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