Accounting: Trial Balance, Matching Concept, Conceptual Framework, Credit Cards and Bad Debts

Running head: ACCOUNTING
Accounting
Name of the Student:
Name of the University:
Author’s Note:

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ACCOUNTING
Table of Contents
Question 1........................................................................................................................................3
Requirement A.............................................................................................................................3
Requirement B.............................................................................................................................4
Question 2........................................................................................................................................4
Requirement A.............................................................................................................................4
Requirement B.............................................................................................................................5
Question 3........................................................................................................................................7
Requirement A.............................................................................................................................7
Requirement B.............................................................................................................................8
Question 4......................................................................................................................................10
Requirement A...........................................................................................................................10
Requirement B...........................................................................................................................11
Question 5......................................................................................................................................15
Requirement A...........................................................................................................................15
Requirement B – Journal Entries...............................................................................................18
Journal Entries...........................................................................................................................19
Question 6......................................................................................................................................20
Requirement A...........................................................................................................................20
Requirement B...........................................................................................................................23

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Reference.......................................................................................................................................24

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Question 1
Requirement A
A trial balance is a statement which is prepared with taking the closing balance of the
different ledger accounts where the debit total balance matches the credit total balance. In simple
words, a trial balance uses closing balance of different ledger accounts which have debit or credit
balances and the statement tallies. If the statement does not tally then there may be certain errors
in the statement. The main use of a trial balance is to check the mathematical accuracy of the
transactions as recorded in the ledger accounts. Every business prepares a trial balance
periodically to ensure that the books of accounts which are made following double entry system
are free from errors which may be due to calculations. This is possible because under double
entry system, the total of debit side will always be equal to the total of credit side. This the
principle which is followed by a trial balance (Needles, Powers and Crosson 2013).
If the trial matches it only means that the mathematical accuracy is there but it does not
mean that their may not be any accounting errors. The matching of trial balance only shows that
there are no calculation errors but there still maty be material errors present in the books of
accounts. For example, an error of omission of an entry will not be identifiable as the trial
balance will match. Another example which can be given is that of bookkeeping error which
means that equal debit and credit been entered into wrong accounts. In this case also, the trial
balance will match but still there is an error in the financial statements.

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Requirement B
Yes No Debit Credit
1. The Accrued Wages account with a
balance of $500 was omitted from the
Trial Balance
Yes Accrued Wages Accrued Wages of $500 should be
paosted in the credit side of trial
balance 500
2. A payment of $490 for Prepaid Rent was
only posted to the Cash at Bank account
and not to Prepaid Rent
Yes Prepaid Rent Debit side of Prepaid Rent should be
increased by $490
490
3. A debit of $458 to Cash at Bank was
posted as $485. The credit entry was
correct.
Yes Cash at Bank Debit Side of Cash at Bank should be
reduced by ($485 - $458) $27
-27
4. A credit of $600 to Accounts Payable
should have been made to Fees Revenue
No Accounts
Payable, Fees
Revenue
Accounts Payable should be debited
and Fees Revenue should be credited
by $600
5. 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
accounts
Yes Cash at Bank,
Accounts
Receivable
Debit 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
-1500
6. The Prepaid Expense balance of $7280
was listed in the Trial Balance as $7820
Yes Prepaid Expense The prepaid expense balance in Trial
Balance should be reduced by ($7820 -
$7280) $540 -540
7. A $5210 credit to Fees Revenue was
posted as a $521 credit. The debit entry to
Accounts Receivable was made correctly.
Yes Fees Revenue The credit side of Fees Revenue
should be increased by ($5210-$521)
$4689. 4689
8. A purchase of offi ce equipment for
$3300 on credit was not recorded.
No Offi ce
Equipment,
Accounts Payable
Offi ce Equipment should be debited
and Accounts Payable should be
credited by $3300
9. 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) $15000
15000
10. The drawings account balance was
listed as a credit for $1500
Yes Drawings Drawings account should be replaced
to debit side of trial balance for $1500
1500
Would the error cause
the Trial Balance not to
balance
Which accounts
would be
affected and
how?
How would the error be corrected
Effect on Trial
Balance totals
Question 2
Requirement A
As per the matching concept of account all the expenses should be reported in the same
period in which the income which is related to such an expense is realized. In other words, this is
an accounting principle which requires to recognize expenses and income in a related way
(Shipman, Swanquist and Whited 2016). As per the matching concept two methods which are

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popularly used in accounting are Accrual system of recognizing and Cash system of
Recognizing.
Under the accrual system of accounting the expenses are recognizes in the year in which
such an expense has been incurred and it does not matter whether cash is paid for such
transaction. In other words, accrual basis of accounting is not dependent on the cash received or
cash paid for recognizing and recording of transactions. Whereas in the case of cash basis of
accounting expenses are recorded when cash is actually paid by the business irrespective of the
fact when the expenses was incurred. Therefore, the major difference between cash basis and
accrual basis is the timing of recognition of transactions.
Requirement B
Part (i)