The general ledger of Emerates Traders Ltd includes the following accounts as at 30 June 2018: $000 Sales Revenue 8,280 Dividend Received 126 Interest Received 65 Cost of Sales 1,105 Selling and Distribution expenses 450 Administration expenses 1,550 Finance costs 16 Valuation loss on trading investments (considered a material item) 250 Income tax expense charged to profit and loss 1,500 Expenses classified by nature include: Auditors Remuneration: Audit of accounts 20 Information technology controls advice 5 25 Depreciation expense: Buildings 120 Plant and Equipment 225 345 Additional Information The valuation loss on investments held for trading is not tax deductible. Task 4 a. Complete a Statement of Comprehensive Income showing expenses classified by function on the face of the Income Statement together with notes to the income statement including the material item. - Note that Emerates Traders Ltd discloses material items on the face of the Income Statement.
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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The general ledger of Emerates Traders Ltd includes the following accounts as at 30 June 2018:
$000
Sales Revenue 8,280
Dividend Received 126
Interest Received 65
Cost of Sales 1,105
Selling and Distribution expenses 450
Administration expenses 1,550
Finance costs 16
Valuation loss on trading investments (considered a material item) 250
Income tax expense charged to
Expenses classified by nature include:
Auditors Remuneration:
Audit of accounts 20
Information technology controls advice 5 25
Buildings 120
Plant and Equipment 225 345
Additional Information
The valuation loss on investments held for trading is not tax deductible.
Task 4
a. Complete a Statement of Comprehensive Income showing expenses classified by
function on the face of the Income Statement together with notes to the income
statement including the material item.
- Note that Emerates Traders Ltd discloses material items on the face of the Income Statement.
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