Accounting is a common linguistic communication developed by comptrollers over clip to specify the rules, constructs, processs and wide regulations necessary for directions use in a feasible accounting system in doing determination and keeping an efficient, effectual and profitable concern. An accounting system shows elaborate information sing assets, debts, ownership equity, gross, operating disbursals and governs entering, coverage and readying of fiscal statements that show the fiscal wellness of a concern entity. In the first inquiry, I ‘m traveling to discourse about the accounting users and information they need and derive from histories, features of utile fiscal information and besides the accounting equation.
In inquiry 2, I ‘m traveling to foster discuss about the test balance. It is a statement incorporating the list of ledger histories on a specific twenty-four hours. Trial balance is a table demoing all debit and recognition balances. The debit column and recognition column of test balance are so totaled up severally. Trial balance is made at the terminal of every period to look into whether the histories entries are right or non. If the history entries are right and no errors, the debit entire and recognition sum in test balance are equal same. If the history entries are wrong, the debt and recognition sums in test balance are non equal. In this status, an probe and a cheque must be carried out to happen out any errors made in the history entries for making rectification.
2.0 Answer 1 ( A ) Accounting Users & A ; 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. The more of import the determination, the greater the demand for accurate information. Basically, all concerns and most persons keep accounting records to assistance in doing determinations. The accounting users and the information ‘s that they need from histories are as follows:
2.1.1 Taxing Governments
Local, province and federal authorities levy revenue enhancements on persons and concerns. They need accounting information to acquire to cognize about the net income earned by the company in order to measure the revenue enhancement collectible by the company. The sum of the revenue enhancement is figured utilizing accounting information. Businesses determine the sum of gross revenues revenue enhancement they owe from accounting records that show how much they have sold. Persons and concerns compute the income revenue enhancement they owe from their recorded net incomes.
2.1.2 Investors and Creditors
These are people who provide merchandising goods or services to the company on recognition. They need accounting information about the company ‘s ability to pay its debts for guaranting their aggregation from the company. Meanwhile, they besides need information to happen out whether it is deserving for them to put their money in the concern or purchasing portions of the company. Investors and creditors play a major function where they provide the modal that a concern demands to get down operations. To make up one’s mind whether to assist to get down a new venture, possible investors evaluate what income they can anticipate on their investing. These average measuring the fiscal statements of the concern. This rating includes a projection of future operations and gross, which is based on accounting information.
2.1.3 Businesss
Directors of concerns use accounting information to put ends for their organisations, to measure advancement towards these ends, and to take disciplinary action if necessary. Decisions based on accounting information may include which edifice to buy, how much ware stock list to maintain on manus and how much hard currency to borrow. Accounting information affects the overall public presentation of the peculiar concern.
2.1.4 Nonprofit Organizations
Nonprofit organisation such as infirmaries, churches, authorities bureaus and colleges, which operate for intents other than net income, uses accounting information in much the same manner that profit-oriented concerns do. Both for net income organisations and non-profit-making organisations trade with budgets, paysheets, rent payments and the all information that comes from the accounting system.
2.1.5 Directors of the Company
Directors are the people appointed by the proprietors of the company to oversee the daily activities in the organisation. They need information about the accounting information of 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. Without these information ‘s, they will happen it hard to run the operation harmonizing to the ends of the organisation. Therefore, accounting information non merely being utile to the finance section for the study but besides for the direction every bit good.
2.2 Answer 1 ( B ) Characteristics of utile fiscal information
These are the feature of utile fiscal statements. These standards ‘s must be fulfilled to do the fiscal statements and histories that are utile to users.
Relevance
The fiscal histories prepared based on accounting constructs and policies should show relevant fiscal information which is capable of act uponing the economic determination of the users. Therefore, the information presented by the fiscal histories should be relevant to the determination devising of the users.
Timeless
Whether the fiscal history information is relevant or non to the determination devising of users, it depends on whether the fiscal histories are made to show information in clip or non when it is needed for determination devising. If the histories are prepared to supply required information in clip, it is relevant to the determination devising of the user.
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 histories of other companies.
Comprehensibility
The fiscal histories prepared on the accounting constructs should be capable of being understood by the users who have sensible cognition of concern, economic activities and accounting.
2.3 Answer 1 ( C ) Accounting Equation
Double Aspect Concept states that there are two facets of accounting. One is the aspect represents concern assets and the other aspect represents concern proprietor ‘s equity or capita plus liabilities. These two facets of accounting have equal values that construct an accounting equation as follows:
Assetss = Business proprietor ‘s equity or capital + Liabilitiess
This accounting equation can be modified to find concern proprietor ‘s equity or capital as follows:
Business proprietor ‘s equity or Capital = Assets – Liabilitiess
Assetss are the economic resources of a concern that are expected to be of benefit in the hereafter. Cash, office supplies, ware, furniture, land and edifices are illustration of assets.
Claims to assets come from two beginnings. Liabilitiess are ‘outsider claims ‘ . They are economic duty, debts collectible to foreigners, called creditors. For illustration, a creditor who has loaned money to a concern has a claim ( a legal right ) to a portion of the company ‘s assets until the concern repays the debts. ‘Insider claims ‘ are called proprietor ‘s equity or capital. These are the claims held by the proprietors of the concern. An proprietor has a claim to the entity ‘s assets because he or she has invested in the concern.
Owner ‘s equity is the sum of assets that remains after the liabilities are subtracted. For this ground, proprietor ‘s equity is frequently referred to as net assets. We frequently write the accounting equation to demo that the proprietor ‘s claim to concern assets as residuary, something that is left over after a minus procedure.
Accounting equation is influenced by dual entry when a brace of debit entry and recognition entry 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 / pulling 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
Use accounting equation to find the proprietor ‘s equity or capital in a concern with specifics as follows:
Office equipment RM 14,680, Premises RM80,000, Mortgage loan RM54,000, Debtors RM3,600, Creditors RM36,000, Fixed Deposit RM15,000, Cash at bank RM9,000, Cash in manus RM2,100.
Assetss
: Office Equipment RM14, 680
: Premisess RM80, 000
: Debtors RM3, 600
: Fixed Deposits RM15, 000
: Cash at Bank RM 9,000
: Cash in Hand RM2, 100
RM124, 380
Liabilitiess
: Mortgage Loan RM54, 000
: Creditors RM36, 000
RM90, 000
Owner ‘s equity or Capital RM34, 380
3.0 Question 2 Answers:
_______________________________Purchase Account________________________________
30 June 2012 Balance b/d 151200 30 June 2012 Balance c/d 154000
Account Payable __2800 ______
154000 154000
1 July 2012 Balance b/d 154000
__________________________________Sales Account________________________________
30 June 2012 Balance c/d 222000 30 June 2012 Balance b/d 218400
______ Accounts Receivable __3600
222000 222000
1 July 2012 Balance b/d 222000
_______________________________Return Inwards Account___________________________
30 June 2012 Balance b/d 16800 30 June 2012 Balance c/d 18000
Histories Receivable _1200 ______
18000 18000
1 July 2012 Balance b/d 18000
___________________________Return Outward Account______________________________
30 June 2012 Balance c/d 9000 30 June 2012 Balance b/d 8400
____ Accounts Payable _600
9000 9000
1 July 2012 Balance b/d 9000
____________________________Wages & A ; Salary Account_____________________________
30 June 2012 Balance b/d 15120 30 June 2012 Balance c/d 17520
Bank _2400 _____
17520 17520
1 July 2012 Balance b/d 17520
_______________________________Rent Paid Account_______________________________
30 June 2012 Balance b/d 3360
_______________________________Rent Received Account____________________________
30 June 2012 Balance b/d 5040
_______________________________Electricity & A ; Water Account_______________________
30 June 2012 Balance b/d 1680 30 June 2012 Balance c/d 1900
Cash in manus _220 ____
1900 1900
1 July 2012 Balance b/d 1900
_______________________________Discount Allowed Account_________________________
30 June 2012 Balance b/d 5040
_______________________________Discount Received Account________________________
30 June 2012 Balance b/d 3360
____________________________ Account Receivable ( Debtors ) _________________________
30 June 2012 Balance b/d 50400 30 June 2012 Return Inwards 1200
Gross saless _3600 Balance c/d 52800
50400 50400
1 July 2012 Balance b/d 52800
___________________________Account Payable ( Creditors ) ____________________________
30 June 2012 Return Outwards 600 30 June 2012 Balance b/d 60480
Balance c/d 62680 Purchases _2800
63280 63280
1 July 2012 Balance b/d 62680
_________________________________Bank Account________________________________
30 June 2012 Balance b/d 42000 30 June 2012 Wages & A ; Wages 2400
_____ Balance c/d 39600
42000 42000
1 July 2012 Balance b/d 39600
_______________________________Cash in Hand Account____________________________
30 June 2012 Balance b/d 25200 30 June 2012 Electricity & A ; Water 220
_____ Balance c/d 24980
25200 25200
1 July 2012 Balance b/d 24980
_________________________________Loan Account________________________________
30 June 2012 Balance b/d 36960
_______________________________Drawings Account_______________________________
30 June 2012 Balance b/d 13440
_______________________Trial balance as at 30 June 2012_____________________________
Debit Credit
$ $
Opening stock at 1 July 2011 42000
Purchases 154000
Gross saless 222000
Return inwards 18000
Tax return outwards 9000
Wagess and wages 17520
Rent paid 3360
Electricity and H2O 1900
Discount allowed 5040
Discount received 3360
Rent received 5040
Land & A ; edifices 168000
Vehicles 117600
Debtors 52800
Bank 39600
Cash in manus 24980
Creditors 62680
Loan 36960
Drawings 13440
Opening capital 1 July 2011 319200
658240 658240
4.0 Conclusion Question 1 and 2
As a decision, accounting is really much connected with each of us personal lives so do in concern. By making this inquiry, I was able to larn and acquire to cognize about the accounting users and the information that they need to deduce from histories. It is of import to cognize so that we can distinguish between the users and the information. Meanwhile, I was besides able to acquire to cognize about the features of utile fiscal information. These standards ‘s listed above explains that it must be fulfilled to do the fiscal statements and histories that are utile to users. This inquiry besides makes me make more research on the accounting equation and the Dual Aspect Concept. It states that there are two facets of accounting. One is the aspect represents concern assets and the other aspect represents concern proprietor ‘s equity or capita plus liabilities. A good accounting helps an organisation to avoid crisis like fraud and keeps the concern records in order.
As for the 2nd inquiry, I was able to do certain that all the minutess had been recorded with similar debit and recognition sums and the balance of the histories has been computed right. It is besides maps to supply arithmetical truth of different leger histories and act as a base to fix a concluding history. It checks for any arithmetical truth. If the test balance does non tally, it is an indicant that the book contains some mistakes. A test balance is the connexion between the leger and the concluding histories. Trial balance prepared at the terminal of the twelvemonth contains a ready list of the shutting balance of all ledger histories. From the test balance, the concluding histories can be prepared without traveling through the leger. After the test balance, the concluding histories made are tallied.
