Issues in financial accounting Essay

Submitted By kishore2287
Words: 400
Pages: 2

a)+

Cash basis Accrual basis 2012 2013 2012 2013 Consulting fees Revenue 44,250 43,000 54,000 60,250 Expenses (30,000) (34,500) (15,000) (21,450) Profit 14,250 8,500 39,000 38,800

b) The accrual basis of accounting provides a better picture of a company's financial position at a moment or point in time. The reason is that all assets that were earned are reported and all liabilities that were incurred will be reported. So because of matching Principle in Accounting it would be better to use Accrual basis.

a) General Journal
Page xx
DATE
ACCOUNTS AND EXPLANATIONS
POST.
REF.
DEBIT
CREDIT
June
30
Salary expense

9,200

1)

Salary payable

9,200

For the salaries owed

June
30
Insurance expense

900

2)

Prepaid insurance

900

Expiration of insurance

June
30
Interest receivable

10,000

3)

Interest revenue

10,000

Accrued interest revenue

June
30
Unearned service revenue

4,600

4)

Service revenue

4,600

To record service revenue

June
30
Depreciation expense

16,000

5)

Accumulated depreciation

16,000

To record depreciation

June
30
Supplies expense

1,800

6)

Supplies

1,800

To record supplies used

June
30
Prepaid rent

1,350

7)

Cash

1,350

To record rent paid in advance

une
30
Advertising expense

900

8)

Advertising payable

900

To accrue advertising expense

44,750
44,750

b)
Unique Security Service
Income Statement
Month Ended 30 June 20XX
Revenue:

Service revenue

4,600 Interest revenue

10,000
Total revenue

14,600
Expenses:

Salary expense
9,200

Insurance expense
900

Depreciation expense
16,000

Supplies expense
1,800

Advertising expense
900

Total expenses

(28,800)
Loss

(14,200)

a)
Company name
Work Sheet
Month Ended xx June 20xx
ACCOUNT TITLE

TRIAL BALANCE

ADJUSTMENTS

ADJUSTED TRIAL BALANCE

INCOME STATEMENT

BALANCE SHEET

DEBIT
CREDIT
DEBIT
CREDIT
DEBIT
CREDIT
DEBIT
CREDIT
DEBIT
CREDIT
Cash at bank
13,640

400

2,120
1,280
10,640

10,640

Account receivable
11,800

11,800

11,800

Prepaid insurance
1,680

1,240
440

440

Land
69,200

69,200

69,200

Building
196,000

196,000

196,000

Accumulated Depreciation-Building

112,880

9,280

122,160

122,160
Equipment
20,120

20,120

20,120

Accumulated Depreciation-Equipment

8,800

3,240

12,040

12,040
Accounts Payable

16,040

16,040

16,040
Mortgage Payable

28,520
1,000

27,520

27,520
Salary Payable

0

2,360

2,360

2,360
Unearned Service Revenue

0

400

400

400
G. Cilic, Capital

103,840

103,840

103,840
G. Cilic, Drawing
127,360

127,360

127,360

Fees Earned

227,920

227,920

227,920

Rent Revenue

14,400

14,400

14,400

Salaries Expenses
63,600

2,360

65,960

65,960

Telephone Expenses
4,520

4,520

4,520

Interest Expenses
3,080

280

3,360

3,360

Insurance Expenses
1,400

1,240

2,640

2,640

Rates Expense
0

2,120

2,120

2,120

Depreciation Expense - Building
0

9,280

9,280

9,280

Depreciation Expense - Equipment
0

3,240

3,240

3,240

91,120
242,320
435,560
284,360

151200

151200
Net…