INTRODUCTION: Trial balance is a statement which shows debit balances and credit balances of all accounts in the ledger. Since‚ every debit should have a corresponding credit as per the rules of double entry system‚ the total of the debit balances and credit balances should tally (agree). In case‚ there is a difference‚ one has to check the correctness of the balances brought forward from the respective accounts. Trial balance can be prepared in any date provided accounts are balanced. DEFINITION
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The BOP accounts summarize international transactions for a specific period‚ usually a year‚ and are prepared in a single currency‚ typically the domestic currency for the country concerned. Since the balance of payment is based upon system of double-entry book-keeping‚ the total debits must equal to total credits. This is because two aspects of each transaction recorded are equal in amount but appear on opposite sides of the balance of payments account. In this accounting sense‚ balances
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debit and credit entries in the account. If the debit total exceeds the credit total‚ the account ahs a debit balance. If the credit total exceeds the debit total‚ the account has a credit balance. 5. What requirement is imposed by the double entry system in the recording of any business transaction? a. The rules for debit and credit are designed so that every transaction is recorded by equal dollar amounts of debits and credits. If this equation is to remain in balance any changes in the left side
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preparing the accounting records for the next period. There are ten steps one must follow in the accounting cycle. The first step in the accounting cycle is to analyze and record transactions in the journal using the double entry-accounting system. During this step you have to read the description of the transaction carefully and determine whether an asset‚ liability‚ owner’s equity‚ revenue‚ expense‚ or drawing account is affected. For each account that is affected by the transaction
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balance on each side being required. The debits are accounted for as assets‚ while the credits fall under liabilities and shareholder equity. (Kimmel‚ Weygandt‚ and Kieso‚ 2011) The equation looks like: Assets = Liabilities + Shareholder Equity. A system of journal entries that show a debit and credit for each entry is used to enter the information. At the end of the accounting period‚ a ledger is generated that shows all of the credits and debits for each area that is accounted for. Some examples
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ACCOUNT BALANCES For many purposes‚ it is necessary to determine the balance in an account. This is accomplished by adding the debits‚ credits‚ and determining the difference between the two sums. An account is said to have a debit balance if the sum of the debit entries to that account exceeds the sum of the credit entries. Conversely‚ an account has a credit balance if the sum of the credit entries exceeds the sum of the debit entries. Asset accounts normally have debit balances inasmuch as
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Author: Mr Nasheeb Rassan www.iccf6.com ------------------------------------------------------------------------------------------------------------------------------------------ Accounting Concept and Conventions In drawing up accounting statements‚ whether they are external "financial accounts" or internally-focused "management accounts"‚ a clear objective has to be that the accounts fairly reflect the true "substance" of the business and the results of its operation. The theory of accounting
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expense on the income statement. FALSE 6. Revenues are a subdivision of owner’s capital. TRUE 7. The trial balance has no limitations or weaknesses. FALSE 8. In an automated system‚ the entering of data and transferring of information is done by following the same steps as in a manual system. TRUE 9. Adjusting entries are often made because some business events are not recorded as they occur. TRUE 10. Adjusting entries are recorded in the general journal but are not posted
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Syllabus Business Studies: Recommended Book: Business Studies by Karen Borrington Peter Stimpson Session: 2011 to 2012 Class: 8A 1st Term April-June‚ 2011 | April-2012 | Unit 1 | The purpose of business activity | | Unit 2 | Types of business activity | May-2012 | Unit 3 | Forms of business organization | September-2012 | Unit 4 | Government and economic influence on business | October/November‚ 2012 | 1st Term Exams | | November-2012 | Ch.5 | Other external influences on business
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sale of goods or services. (an increasing in equity resulting from the sale of goods or services) Expenses: which are the costs related to the revenues. Drawing: which are the owner’s withdrawals for personal use. Purpose of expanding the system: -The new accounts in the equity section of the ledger have one main purpose. -Provide essential information about the progress of the business. -Information need by managers and owners to see if the business is being run profitably and make
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