(When profits as per financial and cost accounts are given). The net profit of A. Co. Ltd. appeared at $41,800 as per financial records for the year ending 31st March, 2019. The cost books, however, showed a net profit of $1,11,900 for the same period. A scrutiny of the figures from both the sets of accounts revealed the following facts : 2$ Works overhead under-recovered in costs Administrative overheads over-recovered in costs 1,500 850 Depreciation charged in financial accounts Depreciation recovered in costs Interest on investments not included in costs 5,600 6,250 3,000 2,850 20,150 Loss due to obsolescence charged in financial accounts Income-tax reserve made in financial accounts Bank interest and transfer fee credited in financial books 370 Stores adjustment (credit) in financial books Value of opening stock in 230 24,800 26,300 25,000 23,000 2,000 1,000 5,000 : Cost accounts : Financial accounts Value of closing stock in Cost accounts : Financial accounts Interest charged in cost accounts Imputed rent charged in cost accounts Goodwill written off Loss on the sale of furniture 600 Selling and distribution expenses not charged in cost accounts Donations to Prime Minister's Relief Fund Transfer to Debenture Redemption Fund Transfer to Dividend Equalisation Fund Prepıre (i) a statement showing the reconciliation of net profit as per cost accounts and net 1own in the financial books; (ii) Memorandum Reconciliation Account. 10,000 5,100 9,000 20,500 profit as
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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