Property, plant and equipment 20 000 000 18 000 000 Current assets: 12 000 000 12 000 000 6 000 000 5 000 000 1 000 000 Inventories 6 000 000 Accounts receivable 4 000 000 Cash and cash equivalents 2 000 000 Total assets 32 000 000 30 000 000 Owners' equity and liabilities Owners' equity 20 000 000 18 000 000 Ordinary share capital 10 000 000 10 000 000 Retained earnings 10 000 000 8 000 000 Non-current liabilities 4 000 000 6 000 000 Current liabilities 8 000 000 6 000 000 Accounts payable 8 000 000 6 000 000 Total owners' equity and liabilities 32 000 000 30 000 000 Statements of changes in equity as at: 31 December: 2021 2020 Balance at end of previous year 18 000 000 16 500 000 Profit for the year 5 000 000 4 000 000 Ordinary share dividends (3 000 000) (2 500 000) Balance at end of current year 20 000 000 18 000 000 Additional information All purchases and sales of inventories are on credit. Eston Limited's ordinary share capital consists of 10 000 000 ordinary shares. The market price of the shares was R5.60 on 31 December 2020 and R7.50 on 31 December 2021. Required: Calculate the following ratios for Eston Limited for 2021 and 2020 and comment on your answers: 5.1 Gross margin 5.2 Debtors collection period 5.3 Return on equity
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.
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