Accounting for Incomplete Records - 58807 Words

Advance Financial Accounting (FIN-611) VU LESSON # 1 ACCOUNTING FOR INCOMPLETE RECORDS 1. Introduction This topic is also known as Single Entry System of Accounting. In this chapter we will learn how an accountant prepares financial statements of those organizations which are not keeping up proper double entry book keeping system of accounting. From accounting system stand point, business organizations can be classified into three broad categories: 1.1 Small scale business entities These consist of very small sized business entities like; barber shop, mutton shop, washer man, general store, electrician etc. etc. 1.2 Medium scale business entities These consist of medium sized business entities like; drycleaner, motor car dealers,†¦show more content†¦Name of the Organization Statement of Profit or Loss For the year ended December 31, 20x7 Rs. Owner’s Equity (closing balance) *** Add Drawings (during the year) *** Less Owner’s Equity (opening balance) (**) Fresh Capital (introduced during the year) (**) Net profit (for the year) [balancing figure] *** 2.3 Statement of Affairs From examination stand point, Drawings and Fresh capital will be given in the questions but often the students will be required to calculate the opening and closing balances of Owner’s Equity as these will not be given in the question as a single amount. (C) Copyright Virtual University of Pakistan 2 Advance Financial Accounting (FIN-611) VU If you have not yet forgotten the basic accounting equation then Statement of Affairs is very simple to understand. What you learned in the basic accounting equation was that: ASSETS = OWNER’S EQUITY + LIABILITIES So to calculate the balance of owner’s equity the equation will be reversed like: OWNER’S EQUITY = ASSETS + LIABILITIES Name of the Organization Statement of Affairs As on Opening and Closing Date Opening Rs. ASSETS Furniture and fixture (net of depreciations) Stocks Debtors (net of provisions) Prepaid expenses Bank Cash LIABILITIES Loan Creditors Accrued expenses OWNER’S EQUITY (Net Assets) *** *** *** *** *** *** Closing Rs. *** *** *** ***Show MoreRelatedThe Past Five Years Auditing1199 Words   |  5 Pageslimited financial resources there is a higher risk that segregation of duties will be compromised as employees often hold multiple roles and responsibilities, as is the case with the accounting functions at VHL. With only one accountant re sponsible for deposits, custody, disbursement of funds, maintaining financial records and preparing financial reports it raises the risk for potential material misstatement due to error or fraud. This could erode the trust and confidence the stakeholders have in VHLRead MoreFinancial Accounting and Its Limitations1184 Words   |  5 PagesWhat are the major limitations of Financial Accounting? Explain with the help of Examples. What are the alternatives to overcome these limitations? Financial accounting can be defined as reporting of the financial position and performance of a firm through financial statements issued to the external users on a periodic basis. It is a field of finance that treats money as a means of measuring economic performance instead of treating it as a factor of production. It encompasses the entire systemRead MoreAccounting Essay932 Words   |  4 Pagesprogress in our study about accounting every new chapter introduces relevant information while consequently building on the data introduced in the previous chapters. This lesson expands further on the accounting cycle by explaining how to adjust and update accounts at the end of the period. Therefore, we learn a new concept which is also referred to as adjusting the books. I am quite convinced that there are numerous people who are familiar with that term, nevertheless, in accounting when we talk about adjustingRead MoreComparing the Gaap and Ifrs1051 Words   |  5 PagesIntroduction There have been proposals that have been working on with regard to the replacement of GAAP (Generally Accepted Accounting Principles) with IFRS (International Financial Reporting Standards) as used in the accounting and financial reporting aspects. Such convergence requires that the functions of the GAAP standards be added to the IFRS. The International Accounting Standards Board (IASB) developed the IFRS which is a less-detailed financial reporting system. This paper seeks to analyzeRead MoreCase Analysis : Solway, Inc. Essay840 Words   |  4 Pageshave shaken both the domestic and international business community. Most of the scandals, however involved the improper application of GAAP regarding revenue recognition and other aggressive accounting techniques such as capitalizing expenses that should have been expensed. However we know now that these accounting techniques are unethical, but it is difficult to draw an ethics line when it comes to other more common techniques of earnings management. Those which are legal and do not violate GAAP. WhatRead MoreQuiz for Accounting Information System784 Words   |  4 Pagesnot have taken. 2. List tasks of database management. (p.12) Three database management tasks are data storage, data retrieval, and data deletion. 3. What services could not public accountings provide with their audit clients? (p.22) There are: Bookkeeping or other services related to the accounting records or financial statements of the audit client; Financial information systems design and implementation; Appraisal or valuation services, fairness opinions, or contribution-in-kind reports; Read MoreGenerally Accepted Accounting Principles1314 Words   |  6 PagesAccountants use generally accepted accounting principles (GAAP) to guide them in recording and reporting financial information. GAAP comprises a broad set of principles that have been developed by the accounting profession and the Securities and Exchange Commission (SEC). Two laws, the Securities Act of 1933 and the Securities Exchange Act of 1934, give the SEC authority to establish reporting and disclosure requirements. However, the SEC usually operates in an oversight capacity, allowing the FASBRead MoreAnalysis Of The Case Rusty And Dusty Slow Movers 1208 Words   |  5 Pagesimpact the profit. Art has indicated that she should help falsify records if it looks like auditors could discover the slow moving inventory. Ethical Issues and Primary Stakeholders The main ethical issues that Penny faces are as follows: First, Penny believes it would be inappropriate to follow Art’s request to not write-down obsolete and old inventory. Second, she is highly concerned about Art’s second request to falsify records and mislead auditors. Penny faces these ethical dilemmas and needsRead MoreGovernmental Non for Profit Accounting Chapter 2 Quiz Essay755 Words   |  4 PagesChapter 02 - Principles of Accounting and Financial Reporting for State and Local 11. The accounting system used by a state or local government must make it possible A. To present fairly the financial position and results of financial operations of the government as a whole, as well as fund financial activity in conformity with GAAP, and to demonstrate compliance with finance-related legal and contractual provisions. 12. Which of the following is not a characteristic of a fund as defined by GASBRead MoreCircuit City Stores Essay1288 Words   |  6 PagesBBUS 361 Intermediate Accounting I Valerie Li Case #2 Circuit City Stores, Inc. (A) 11/08/2012 1. Describe the impact the three proposed accounting methods (full revenue recognition, deferral of revenue, and partial revenue recognition) would have on the company’s financial statements: 1) at the time of the sale, and 2) in future periods. * Full revenue recognition method would recognize total revenue and total cost at the date of sale. Adjustments will be recognized when the warranty