Financial accounting expo

1a.
Choose 4
– delivery dockets
– sales and purchase invoices
– credit and debit notes
– deposit slip
– cheques
.
1b.
– period charged to income
– relationship to planning, controlling and
decision making
– ability to trace
– relationship to volume
.
1c
– to find out the unpresented cheques which
have been already issued to the creditors.
– to find out what are the reasons behind why
either bank statement or cash book shows the
different amounts apart from the expected
balances.
.
2a.
A trial balance is a bookkeeping or accounting
report that lists the balances in each of an
organization’s general ledger accounts.
.
2b.
– to detect any errors that has occurred in the
double entry accounting system
– it helps in the preparation of financial
statements
.
2c
1. Errors of Principle br /> An error of principle is an error which violates
the fundamentals of book-keeping. For
instance, purchase of furniture is debited to
Purchase Account, instead of Furniture Account;
Wages paid for the erection of plant is debited
to Wages Account, instead of Plant Account;
the amount spent on extension of building is
debited to Repairs Account instead of Building
Account etc. These types of errors do not
affect the total debits and total credits but
affect the principle of book-keeping.
.
2. Errors of Omission br /> If a transaction is completely omitted, there
will be no effect on the Trial Balance. When a
transaction goes completely unrecorded in both
aspects or a transaction after being recorded in
the books of primary entry is not at all posted
in the ledger, the error is an error of omission.
For instance, if a credit purchase is omitted to
be recorded in the Purchase Day Book, then it
will be omitted to be posted both in the
Purchase Account and the Supplier’s Account.
This error will not, however, result in the
disagreement of Trial Balance.
.
3. Posting to Wrong Account br /> Posting an item to wrong account, but on the
correct side. For instance, if a purchase of Rs
200 from Ramu has been credited to Raman,
instead of Ramu and this error will not affect
the agreement of Trial Balance. Thus, Trial
Balance will not detect such an error.
3a)
It is not a legally binding practice; rather, it
is a generally accepted convention based on
customs and designed to help accountants
overcome practical problems that arise out of
the preparation of financial statements.
3b) Materiality: An important convention. As we
can see from the application of accounting
standards and accounting policies, the
preparation of accounts involves a high degree
of judgement. Where decisions are required
about the appropriateness of a particular
accounting judgement, the “materiality”
convention suggests that this should only be an
issue if the judgement is “significant” or
“material” to a user of the accounts. The
concept of “materiality” is an important issue
for auditors of financial accounts.
4. Error of Amounts in Original Book br /> If an invoice for Rs 632 is entered in Sales
Book as Rs 623, the Trial Balance will come
out correctly, since the debit and credit have
been recorded as Rs 623. The arithmetical
accuracy is there, but in fact there is an error.
(4a)
Depreciation is the measure of the
wearing out, consumption or other loss of value
of a fixed asset whether arising from use,
effluxion of time or obsolescence through
technology and market changes .
(4b)
I. Physical deterioration ii. Obsolescence
iii. The time factor iv. Economic factor v.
Inadequacy .