Ch 12 - Constructing accounts

Question 1

Trial balance (TB)

Answer 1

SFP & SPL are prepared from the underlying bookkeeping records. All transactions are recorded into a double entry bookkeeping system.
_
debit items = expense items for P/L & assets for SFP
credit items = revenue items for P/L & capital or liabilities for SFP
_
every figure in the TB is used once in the preparation of either SPL or SFP

Question 2

Notes at the bottom of the trial balance gives info on what 3 things?

Answer 2

i) inventories at the end of the year (i.e closing stock)
ii) this year’s depreciation
iii) adjustments for the accruals concept