Professional Documents
Culture Documents
Assessment 1
Assessment 1
Assets=Liabilities+ Equity
Assets are the resources owned by the organisation such as cash, building and
property, Inventory, etc. and is used to carry out the transactions of the
organisation.
Liabilities are the debts and obligations the organisation owes to external
credit, usually for a fixed term. These are claimed against assets as the
organisation will use this to clear the liability when their terms come to a close.
Equity is another source of funds for the organization and this comes from two
(2) sources: (i) Total Paid-In Capital which is provided directly by the
owner(s)/investors which is used to obtain its assets; and (ii) Retained Earnings
Accounting and in order to understand this fully one must first define the two terms.
which is easily understood. Some of the activities involved are posting of debits and
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credits, generating invoices and maintenance of ledgers, accounts, etc. Accounting on the
other hand is the all-encompassing term used to describe the entire process of identifying,
process as it covers the identification and recording portions of the process. The
generation of a wide range of reports, statements and other related documents which are
3) Current assets are those which an organisation expects will be converted to cash or
consumed within one year or its operating cycle. Accounts normally classified as “
inventories;
short-term investments;
cash.
4) When an initial trial balance is prepared, it is at times incomplete as there may still be
outstanding and incomplete data. This occurs for many reasons including:
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For some events which may affect accounts, it would be inefficient to record
the day to day economic impact. As such, its effects are recorded at the end of
the accounting period via adjusting entries which modify account balances
so as to reflect the true situation at the end of the period. (Example: use of
Some items as simply not yet recorded. (Example: a utility bill not yet
Deferrals
supplied/performed.
Accruals:
already provided/performed.
5) Using the adjusted Trial Balance for Milestones Inc as of December 31, 2019 provided,
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(a) Milestones Inc. Income Statement for the Year ended December 31, 2019
Milestones Inc
Income Statement
For the Year Ended December 31, 2019
Revenue
Service Revenue $25,400.00
Expenses
Salaries and Wages Expense $5,200.00
Depreciation Expense $4,200.00
Insurance Expense $5,000.00
Total Expenses $14,400.00
Total Income Before Tax $11,000.00
Income Tax Expense $3,500.00
Net Income $7,500
Milestones Inc
Retained Earnings Statement
For the Year Ended December 31, 2019
Milestones Inc
Statement of Financial Position
as at December 31, 2019
Assets
Property, plant & Equipment
Equipment $67,500.00
Total Fixed Assets $67,500.00
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Current Assets
Supplies $4,500.00
Accounts Receivable $6,000.00
Prepaid Insurance $7,000.00
Cash $15,000.00
Total Current Assets $32,500.00
Total Assets $0
Non-Current Liabilities
Accounts Payable $23,500.00
Total Non-Current $23,500.00
Liabilities
Current Liabilties
Notes Payable (due 2021) $18,000.00
Total Current Liabilities $18,000.00
Total Liabilities $41,500.00
Total Equity & Liabilities $100,000