Poa Chp 5

• List down errors that will not be revealed by a trial balance

  • The wrong amount is recorded on both debit and credit entry
  • The transaction is not recorded at all
  • the transaction is recorded in the wrong account of a different accounting element
• Explain what is trial balance

  A trial balance is a list of all ledger accounts and their ending balances at a point in time
• State 2 purposes of a trial balance

  • To facilitate the preparation of financial statement
  • ensure arithmetic accuracy of recording
• State the limitation of trial balance

  There may be error that are not revealed by a trial balance so even if the trial balance is tallied, it is not proof of accuracy in recording
• Explain what is the statement of financial performance

  income earned and expenses incurred for a period of time. It is inform stakeholders profitability of a business
• Explain what is a statement of financial position

  A statement of financial position lists assets, liabilities and equity of business at a specific date. It informs stakeholders how the resources are obtained and used in the business and claim by the owners on the net assets of a business
• Accounting information system

  Source document - Journal - ledger - trial balance - statement of financial performance - statement of financial position