Topic 13: Financial statements (with adjustments)

Question 1

What are the main adjustments of the trial balance?

Answer 1

1.Expenses accrued and prepaid
2.Revenues accrued and in advance
3.Provision for depreciation
4.Provision for irrecoverable debts
5.Correction of errors discovered on the lasty day of the year
6.Other transcations that occur around the last day amd have not yet been recorded

Question 2

Compare liabilities and Provisions.

Answer 2

a liability is an amount owing which can be determined with substancial accuracy and must be paid while provision is an amount set aside against profits to cover for uknown liability of which the amount or when it happens cannot be determents with substantial accuracy