Accounting consists of many users and there is a batch of information they need and derive from histories. There are internal users people within the organisation and besides external users ( people outside the organisation ) who use histories to deduce fiscal information for their demands as there is such people like the director, employees, stockholders and etc. Besides that, there are besides features of utile fiscal information. In add-on, to fulfill the utile fiscal information, company demand to carry through the following standards such as relevancy, seasonableness, truth, comparison and comprehensibility. And in conclusion, accounting equation contains a construct which is called Double Aspect Concept. Dual Aspect Concept states that there are two facets of Accounting, out of which one facet represents concern assets and the other assets represent concern proprietor ‘s equity or capital plus liabilities. These two facets of accounting have equal value that construct an accounting equation.
Introduction Question 2
The 2nd inquiry of the assignment is about a test balance at 30 June 2012 that is already prepared by an accounting clerk. However, the test balance is unequal due to mistakes of seting history balances and some minutess omitted or left out from the record. The inquiry two requires us to redraft the test balance after sing the mistakes and the omitted dealing.
Answer Question 1
State out five users of accounting and clearly explicate the information that they need and derive from histories.
The 5 users of accounting and the information they need:
Directors of the company:
These are people appointed by the company ‘s proprietors to oversee the twenty-four hours to twenty-four hours activities of the company. They need accounting information about the company ‘s fiscal state of affairs as it is presently and as it is expected to be in the hereafter to enable them to pull off the concern expeditiously and to take effectual control and planning determinations. Besides that, they besides need to analyse the company ‘s whole concern in order to pull off the net income and loss for the company. With complete accounting statistic for the company, the directors can pull off the company much easier.
Stockholders or proprietors of the company:
These are concern owners or the proprietors of the company. They need accounting information to measure how efficaciously the direction of company is executing its stewardship map, how productively the direction is running company ‘s operations and how much net income they can retreat from their dividend wage. The stockholders or the proprietors need to cognize the accounting state of affairs to guarantee that they know how the company is running throughout the twelvemonth. Besides that, they need to the net income of the company in order to acquire their dividend wage. The stockholder or the proprietor ca n’t retreat dividend wage without equilibrating the history of the company.
Suppliers of finance to the company such as Bankss and other fiscal establishment:
They provide loan and overdrafts for the company to finance concern activities. They need accounting information about the company ‘s fiscal position to guarantee that the company is able to maintain up with involvement payments and finally refund the chief sum of loan advanced. The company has to manus up the history of their company when they are about the loan a amount of money. These suppliers of finance will analyse and do a decision to borrow or non to the company. Not all company is eligible to return the money after they loan it from the suppliers. Therefore, these suppliers of finance demand to utilize the accounting.
Customers or debitors:
These are people who purchase goods or services provided by the company. They need accounting information about the company ‘s fiscal stableness position to guarantee that the company is a unafraid beginning of supply and no danger to holding near down. Customers and debitors need to cognize the fiscal stableness if they would non desire to purchase points or services from a fraud company or a company which is about to travel bankrupt. Besides that, debitors need to cognize the fiscal state of affairs because if the company is non paying the debts so the debts will go bad debts and the debitors themselves will hold to bear the loss themselves.
Employees of the company:
These are the people employed by the company to transport out concern activities. They need accounting information about the company ‘s fiscal state of affairs because their hereafter callings and the size of their rewards and wages depend on it. They have to pull off the accounting information decently if they are looking frontward for a rise or publicity for their hereafter. The company advanced and this besides benefits the employees.
Answer Question 1 ( B )
Explain in inside informations about the feature of utile accounting information.
Characteristic of utile fiscal information:
For holding fiscal statements and histories to supply utile fiscal information to the history users, company should fulfill the undermentioned standards in fixing its histories: Relevance, Timeliness, Accuracy, Comparability, Understandability, and Reliability.
Relevance
The fiscal histories prepared based on accounting constructs and policies should show relevant fiscal information which is capable of act uponing the economic determinations of the users. Therefore, the information presented by the fiscal histories should be relevant to the determination devising of the users. The relevancy of information provided is of import as it will act upon the determination devising of the company.
Timeless
Whether the fiscal history information is relevant or non the determination devising of users, it depends on whether the fiscal histories are made to present information on clip or non when it is needed for determination devising. If the histories are prepared to supply required information on clip without hold, it is relevant to the determinations devising of the user. If the histories are non prepared to supply information on clip because of hold, it is non relevant to the determination devising of the users.
Accuracy
The fiscal histories should supply accurate fiscal information to the users for determination devising because the inaccurate history information will take to inaccurate determination made by the user.
Comparison
The fiscal histories made based on accounting constructs should be comparable with the old twelvemonth histories and comparable with histories of the other companies.
Comprehensibility
The fiscal histories prepared based on the accounting constructs should be capable of being understood by the users who have sensible cognition of concern, economic activities and accounting.
Dependability
Fiscal histories should show dependable information to the users for determination devising. The fiscal history information is dependable if
It reflects the substance of dealing to show dependably and genuinely what has already happened
It is free from prejudice and impersonal.
It is free from mistake.
It is complete of needed history information.
It is prudent and realistic where there is any uncertainness.
If the above stated points are non fulfilled, the fiscal history information is non dependable for the determination doing user.
Answer Question 1 ( C ) .
Accounting Equation
Double Aspect Concept states that there are two facets of accounting, out of which one aspects represents concern proprietor ‘s equity or capital as follows:
Business proprietor ‘s equity or Capital + Liabilitiess
Accounting equation is influenced by dual entry when a brace of debit entry and recognition is made at the same time in two histories for entering a concern dealing. Therefore, the record of a concern dealing with dual entry will do alterations in accounting equation as follows:
Assetss
Owner ‘s Equity or Capital
Liabilitiess
Increased by debit relevant plus history
Increased by recognition capital or Net income / loss history
Unchanged
Increased by debit relevant plus history
Unchanged
Increased by recognition relevant liability history
Decreased by recognition relevant plus history
Decreased by debit Capital / Drawing history
Unchanged
Decreased by recognition relevant plus history
Unchanged
Decreased by debit relevant liability history
Unchanged
Decreased by debit Net income /Loss history
Increased by recognition relevant liability history
Unchanged
Increased by recognition capital history
Decreased by debit relevant liability history
Examples:
Assetss:
CashA RM2100
Bank RM9000
Debtors Premises RM80000
Office Equipment RM14680
RM124380
Less Liabilitiess:
Creditors RM36000
Mortgage Loan RM54000
Fixed Deposit RM15500
Capital RM109380
Assetss RM124380- Liabilitties RM90000 = RM34380
Answer of Question 2:
Purchases Account
2012
30 June Balance b/d
Creditor
1July Balance b/d
$
151,200
2,800
154,000
154,000
2012
30 June Balance c/d
$
154,000
154,000
Creditors Account
2012
30 June Return Outwards
Balance c/d
$
600
62,680
63,280
2012
30 June Balance b/d
Purchase
1July Balance b/d
$
60,480
2,800
63,280
62,680
Return Outwards Account
2012
30 June Balance c/d
$
9,000
9000
2012
30 June Balance b/d
Creditor
1July Balance b/d
$
8,400
600
9000
9000
Gross saless Account
2012
30 June Balance c/d
$
222,000
222,000
2012
30 June Balance b/d
Debtor
1July Balance b/d
$
218,400
3,600
222,000
222,000
Cash in manus Account
2012
30 June Balance b/d
1July Balance b/d
$
25,200
25,200
24,980
2012
30 June Electricity and H2O
Balance c/d
$
220
24,980
25,200
Debtors Account
2012
30 June Balance b/d
Gross saless
1July Balance b/d
$
50,400
3,600
54,000
52,800
2012
30 June Return Inwards
Balance c/d
$
1,200
52,800
54,000
Return Inwards Account
2012
30 June Balance b/d
Debtor
1July Balance b/d
$
16,800
1,200
18,000
18,000
2012
30 June Balance c/d
$
18,000
18,000
Bank Account
2012
30 June Balance b/d
1July Balance b/d
$
42,000
42,000
39,600
2012
30 June Salary
Balance c/d
$
2,400
39,600
42,000
Wagess and Salaries Account
2012
30 June Balance b/d
Bank
1July Balance b/d
$
151,200
2,400
17,520
17,520
2012
30 June Balance c/d
$
17,520
17,520
Electricity and H2O History
2012
30 June Balance b/d
Cash in manus
1July Balance b/d
$
1,680
220
1,900
1,900
2012
30 June Balance c/d
$
1,900
1,900
Trial Balance as at 30th June 2012
Debit
Recognition
Opening stock at 1st July 2012
Purchases
Gross saless
Tax return inwards
Tax return outwards
Wagess and wages
Rent paid
Electricity and H2O
Discount allowed
Discount received
Rent received
Land & A ; edifice
Vehicles
Debtors
Bank
Cash in manus
Creditors
Loan
Drawings
Opening capital 1 July 2011
$
42,000
154,000
–
18,000
–
17,520
3,360
1,900
5,040
–
–
168,000
117,600
52,800
39,600
24,980
–
13,440
–
$
–
–
222,000
–
9,000
–
–
–
–
3,360
5,040
–
–
–
–
62,680
36,960
–
319,200
658,240
658,240
Conclusion Question 1
As for the decision for inquiry 1, I have learned what type accounting users uses accounting information to assist them in their field of work. There are assorted type of users and they use the accounting information for their concern or company in order to progress. Besides that, I have besides learned the feature of utile fiscal information. There are a few standards to run into in order to bring forth proper determination devising in accounting information. Other than that, I besides learned the Dual Aspect Concept and the working to work out the equation.
Conclusion Question 2
As for the decision inquiry 2, I have learned test balance. There were unequal due to mistakes of seting history balances and some dealing. I have besides redraft the test balance after sing the mistakes and the omitted dealing.
