Essay on Accounting: Formulation of Trial Balance and Financial Statements

Essay on Accounting
Fundamental

Table of Contents
Table of Contents.............................................................................................................................2
INTRODUCTION...........................................................................................................................1
MAIN BODY..................................................................................................................................1
Question 1....................................................................................................................................1
Question 2....................................................................................................................................3
Question 3....................................................................................................................................5
Question 4....................................................................................................................................8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................11

INTRODUCTION
Accounting can be defined as the process of recording business transactions in the books
and final accounts. With the help of it, details of all the incomes and expenses are recorded in
different reports that are generated by an organisation. While planning to determine actual
position of business as well as company it is very important for all the companies to make sure
that they are able to conduct accounting in systematic manner (Burger and Curtis, 2017). It will
help to formulate future policies for betterment of company. Present essay is based upon
formulation of trial balance and financial statements such as profit and loss account and balance
sheet. Apart from this, discussion regarding relevancy of final accounts for users along with
contrasting and comparison of liquidity and profitability are also discussed in this essay.
MAIN BODY
Question 1
Journals entries:
Particulars Debit Credit
Depreciation on motor vehicle a/c Dr. 11670
To accumulated dep a/c 11670
Accumulated dep a/c Dr. 11670
To Motor vehicle a/c 11670
Depreciation on computer equipment a/c Dr. 900
To accumulated dep a/c 900
Accumulated dep a/c Dr. 900
To motor equipment a/c 900
Telephone bill a/c Dr. 180
To cash a/c 180
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Insurance a/c Dr. 640
To prepaid insurance 640
Trial balance:
Particulars Dr. Cr.
Accounts payable 25680
Accounts receivable 30700
Carriage inward 1840
Carriage outward 3280
Drawing 26000
Electricity 2480
Loan interest 300
Provision for doubtful debts 450
Insurance 2720
Petty cash 50
Closing stock 14400
Bank overdraft 2880
Wages 67440
Purchase 126800
Rent 23760
Sales 256400
telephone 1620
Long term loan 8000
Accumulated dep on motor vehicles 26670
Accumulated dep on computer equip-
ment 3540
Computer equipment 4500
Motor vehicle 53900
Capital 48000
Advance insurance 640
Unpaid tax 1500
Suspense account 13630
374510 374510
Profit and loss account:
Particulars Amount Particulars Amount
Opening stock 13200 Sales 256400
Purchase 126800 Closing stock 14400
Carriage inward 1840
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