Assignment Question(s): (Marks15)
Q1. On your own words, outline the accounting principles and assumptions and explain each one. (Marks5)
Q2. What is the accounting cycle? Explain every step starting from analyzing transactions to preparing post-closing trial balance. (Marks5)
Q3. Based on the following trial balance for ABC Co, prepare an income statement, statement of retained earnings and a balance sheet. The company made no additional investments in the company during the year. (Marks5)
ABC Co.
Trial Balance December 31 |
||
Cash | SR 6,500 | |
Accounts receivable | 475 | |
Supplies | 2,500 | |
Equipment | 17,000 | |
Accounts payable | SR 745 | |
Common stock | 10,000 | |
Retained earnings | 11,155 | |
Dividends | 36,000 | |
Revenue earned | 72,000 | |
Supplies expense | 3,425 | |
Rent expense | 6,000 | |
Wages expense | 22,000 | |
Totals | SR93,900 | SR93,900 |
What is the accounting cycle? Explain every step starting from analyzing transactions to preparing post-closing trial balance.