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Liabilities
Preparing Trial Balance
Obligations of an entity resulting from past
A listing of all accounts and their balances in the
transactions of which future benefits will be
ledger that aids in the proving of equality of the
expected to outflow
debits and credits.
Current Liabilities Non-Current Liabilities Must be arrange according to its liquidity
Cash – Receivables – Prepaid – Supplies ...
Payables Notes Payable
Unearned Service Errors in Trial Balance
Revenue
Deferred Income If the difference between the debit and credit is
Accrued Expenses equal to a certain amount in the ledger, there is
a probability that an ommission of a specific
Equity account balance from the ledger was occured,
or such amount was not posted to the trial
Interests or claims of owners from the business balance.
Reflects all investments made by owner and If the difference between the debit and credit is
results of operations of the business divided into two and it corresponds to a specific
amount in the general ledger, there is a
Equity Contra-Account probability that such account was erroneously
Owner’s equity Owner’s Drawings posted to the wrong balance.
Slide – error resulting from adding or deleting
Revenue zeros in writing numbers, example P417.50
instead of P4,175.00.
The amount a business charges customers for Transposition-accidental rearrangement of
products sold or services performed numbers. For example, P1,050.00 instead of
Service & Interest Revenue P1,500.00
Gain on sales
Sales Returns, Discounts, and Allowance
Expenses
Expense xx
Accrued Expense xx
Doubtful Accounts
An estimate of the amount of receivables that is BASED ON Accounts Receivable
doubtful as to collection. Also called uncollectible On the other hand, if it is computed based on
receivables, the resulting amount will be the
accounts or bad debts
allowance for doubtful accounts.
Doubtful accounts expense is shown in the We have to consider the beginning balance of
income statement as part of expenses AFDA to arrive at the DAE
Allowance for doubtful accounts is shown in the
balance sheet as a deduction from the accounts 2012 2013 2014
receivable to get the net realizable value. Accounts
receivable 100,000 150,000 500,000
AFDA – dumadagdag yung amount every year
(recorded kasi sa balance sheet) Sales 500,000 400,000 600,000
Doubtful accounts may be estimated based on
sales, or based on receivables. Doubtful accounts estimated at:
DAE – Pag nag eend yung accounting period, b. 5% accounts receivable
bumabalik sya sa 0
Depreciation Expense xx 2012 Doubtful accounts expense 5,000
Accumulated depreciation xx Allowance for doubtful accounts 5,000