Answer to Question #186510 in Accounting for Halfco

Question

a) The fact that your trial balance agree does not mean that there are no errors. Discuss

12 marks

b) Accounting equation is the basis for the preparation of statement of financial position

in accordance to IFRS financial statement presentation. Explain 10 marks

c) Explain double entry in accounting and relate it to appropriate accounting concept.

Answer 1

a)There are some errors that are not shown in the trial balance. These are compensating errors. For example, an excess debit is offset by an excess credit, the trial balance cannot detect such errors

b)This is the equation Assets= Liabilities or Funds= sources, i.e. Sources are placed in the means or can be said to be transformed.

с)A double entry is a record, as a result of which each business transaction is reflected in the accounting accounts twice: on the debit of one account and on the credit of another account related to it. The double entry shows where the funds came from and where they are going.