Calla Company presented its cost of goods sold statements for the year ended December 31, 2016 with the following information: Inventory, Beginning P 360,000 Purchases 4,100,000 Inventory, Ending 700,000 The auditor noted the following during its audit of inventories: 1. Inventory balance at year-end is based on physical count and no reconciling items were considered. 2. Purchases made were at FOB Shipping point. 3. At the end of the year when cut-off procedures performed, • Sales of P286, 000 (cost of P85,800) were made on account on December 31, and the goods were delivered at that time, but all entries related to the sales was made January 2. • Invoices totaling to P64,000 were entered in the voucher register in January, but the goods were received in December. • December invoices of P46,000 were entered in the voucher register in December, but goods were not received until January. • Invoices of P65,400 were entered in the voucher register in January, and the goods were received in January, but the voices were dated December. • At the beginning of the year when cut-off procedures performed, it revealed that invoices totaling P95,000 was recorded in January for goods received last December. Invoices amounting to P45,000 were entered in the vouchers in December but the goods were not received until January.
The Effect Of Prepaid Taxes On Assets And Liabilities
Many businesses estimate tax liability and make payments throughout the year (often quarterly). When a company overestimates its tax liability, this results in the business paying a prepaid tax. Prepaid taxes will be reversed within one year but can result in prepaid assets and liabilities.
Final Accounts
Financial accounting is one of the branches of accounting in which the transactions arising in the business over a particular period are recorded.
Ledger Posting
A ledger is an account that provides information on all the transactions that have taken place during a particular period. It is also known as General Ledger. For example, your bank account statement is a general ledger that gives information about the amount paid/debited or received/ credited from your bank account over some time.
Trial Balance and Final Accounts
In accounting we start with recording transaction with journal entries then we make separate ledger account for each type of transaction. It is very necessary to check and verify that the transaction transferred to ledgers from the journal are accurately recorded or not. Trial balance helps in this. Trial balance helps to check the accuracy of posting the ledger accounts. It helps the accountant to assist in preparing final accounts. It also helps the accountant to check whether all the debits and credits of items are recorded and posted accurately. Like in a balance sheet debit and credit side should be equal, similarly in trial balance debit balance and credit balance should tally.
Adjustment Entries
At the end of every accounting period Adjustment Entries are made in order to adjust the accounts precisely replicate the expenses and revenue of the current period. It is also known as end of period adjustment. It can also be referred as financial reporting that corrects the errors made previously in the accounting period. The basic characteristics of every adjustment entry is that it affects at least one real account and one nominal account.
What is the correct balance for purchases
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