Lecture on Concepts of Accounting - Assignment
Added on 2021-05-31
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Running head: ACCOUNTINGAccountingName of the Student:Name of the University:Author’s Note:
1ACCOUNTINGTable of ContentsQuestion 1........................................................................................................................................3Requirement A.............................................................................................................................3Requirement B.............................................................................................................................4Question 2........................................................................................................................................4Requirement A.............................................................................................................................4Requirement B.............................................................................................................................5Question 3........................................................................................................................................7Requirement A.............................................................................................................................7Requirement B.............................................................................................................................8Question 4......................................................................................................................................10Requirement A...........................................................................................................................10Requirement B...........................................................................................................................11Question 5......................................................................................................................................15Requirement A...........................................................................................................................15Requirement B – Journal Entries...............................................................................................18Journal Entries...........................................................................................................................19Question 6......................................................................................................................................20Requirement A...........................................................................................................................20Requirement B...........................................................................................................................23
3ACCOUNTINGQuestion 1Requirement AA trail balance is an accounting report that lists the balances of general ledger account ofreporting entity. The amounts attributable to debit balances are listed in the column with headingdebit and the amounts attributable to credit balances are listed under the column within headingcredit balances. In other words, it makes use of closing balances of different ledger accountshaving credit and debit balances. There arise errors in the statements if the debt balances are notequal to credit balances. Verifying the mathematic accuracy is the main objective of trailbalances as the transactions are recorded in the ledger accounts (Hoyle et al. 2015). However, ifthe debit and credit balances are tallying, then this is indicative of the fact that there no errors incalculation. It does not indicate that the books of accounts are free from material errors. Forexample, whether the trail balance will tally or not is not identified by errors in the omission ofany entry into the account.
4ACCOUNTINGRequirement BYes NoDebitCredit1. The Accrued Wages account with a balance of $500 was omitted from the Trial BalanceYes Accrued WagesAccrued Wages of $500 should be paosted in the credit side of trial balance 5002. A payment of $490 for Prepaid Rent was only posted to the Cash at Bank account and not to Prepaid RentYes Prepaid RentDebit side of Prepaid Rent should be increased by $4904903. A debit of $458 to Cash at Bank was posted as $485. The credit entry was correct.Yes Cash at BankDebit Side of Cash at Bank should be reduced by ($485 - $458) $27-274. A credit of $600 to Accounts Payable should have been made to Fees RevenueNoAccounts Payable, Fees RevenueAccounts Payable should be debited and Fees Revenue should be credited by $6005. A Dr. for a cash receipt of $500 from customers in settlement their accounts was posted twice as a Dr. to the Cash at Bank and a Dr. to Accounts Receivable accountsYes Cash at Bank, Accounts ReceivableDebit side of Cash at Bank should be decreased by $500, whereas, the debit balance of accounts receivable should be reduced by ($500 x 2) $1000-15006. The Prepaid Expense balance of $7280 was listed in the Trial Balance as $7820Yes Prepaid ExpenseThe prepaid expense balance in Trial Balance should be reduced by ($7820 - $7280) $540-5407. A $5210 credit to Fees Revenue was posted as a $521 credit. The debit entry to Accounts Receivable was made correctly.Yes Fees RevenueThe credit side of Fees Revenue should be increased by ($5210-$521) $4689.46898. A purchase of office equipment for $3300 on credit was not recorded.NoOffice Equipment, Accounts PayableOffice Equipment should be debited and Accounts Payable should be credited by $33009. A purchase of Furniture for $7500 using a loan was posted as a debit to the Loan Payable account and a debit to the Equipment account.Yes Loan Payable Credit side should be increased by ($7500 x 2) $150001500010. The drawings account balance was listed as a credit for $1500Yes Drawings Drawings account should be replaced to debit side of trial balance for $15001500Would the error cause the Trial Balance not to balanceWhich accounts would be affected and how?How would the error be correctedEffect on Trial Balance totalsQuestion 2Requirement AIt is required to record all the expenses in the same period in which such expenses arerecorded according to the matching concept of accounting. Cash system of Recognizing andAccrual system of recognizing are the two methods used for recording the expense as permarching concept. Expenses under the accrual system are recognized in year when suchexpenses have been incurred irrespective of whether the cash is paid for such transactions or not.
5ACCOUNTINGThis particular method does not depend on the matter whether the cash is paid or not. On otherhand, under the cash basis of accounting for expenses, expense are recorded when cash isactually paid regardless of the fact that they have been incurred (Chen et al. 2017). Requirement BPart (i)
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