QUESTION ONE C. The following trial balance was extracted from the books of xulu at the close of business on 29 February 2016. Dr Ksh. Cr Ksh. Purchases and sales Cash at bank Cash in hand Capital account 1 March 2015 Drawings Office furniture Rent Wages and salaries Discounts 92.800 4.100 324 157.165 11,400 17,100 2.900 3.400 31.400 820 160 Debtors and creditors Stock 1 March 2015 Provision for doubtful debts 1 March 2015 Delivery van Van running costs Bad debts written off 12.316 4.120 5.245 405 3.750 615 730 174.375 174,375 Additional information. (a) Stock 29 February 2016 was Ksh. 2,400. (b) Wages and salaries accrued at 28 February 2016 was Ksh. 340. (c) Rent prepaid at 29 February 2016 was Ksh. 230. (d) Van running costs owing at 29 February 2016 Ksh. 72. (e) Increase the provision for doubtful debts by Ksh. 91. (f) Provide for depreciation as follows: Office funiture Ksh. 380; Delivery van Ksh. 1,250. Required Prepare 1) Trading and profit and loss account (income Statement) for the year ended 29 February 2016. 2) Balance sheet (Statement of Financial position) as at that date.
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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