7. expline bad debts? 8.expline a provision for doubtful debts? non current asse

Question

7. expline bad debts?
8.expline a provision for doubtful debts?

non current assers, current assets, habilities h Yearend adjustments have to be made as necessary. They includ e accruals, prepayme unusual reclassa transactions tication, to conform book figures to physical inventory counts, and reflectin Finaly, a statement of comprehensive income and statement of financial position for the accounting year are to be drawn up. Review Questions 1 Describe the final accounts of a sole trader. 2 Explain what is meant by 'year end adjustment ??? the following terms: a. Non-current asset b. Current asset c Non-current liability, and d. Current liability 4 Exsplain the purpose of preparing the statement of comprehensive income s Explain the purpose of preparing the statement of financial position. 6 Explain briefly the objectives of preparing financial statements.

Explanation / Answer

1. The final Accounts of a sole proprietership consists of :-

i) Profit & Loss Account :- It shows the income and expenses of the business during a finacial year. It also indiactes the profit of the proprieter from its business

ii) Balance Sheet :- It consists of Assets, liabilities and Capital

2. Year end adjustments are the jounal enries which are made at the of the financial year for a better matter match of Revenue and Expenses incurred during a finacial year.It is used to record economic events related with other than cash/Bank. It is based on the principal of Revenue Recognisation.

3(a). Non current Assets :- These are the long term assets which are convertable into cash at least after one financial year

Current assets :- These are the short term assets which are expected to convertable into cash within same financial year

Non Current liability :- These are long term liabilities which are to be paid off after at least one financial year

Liability :- These areshort term liabilities which are to be paid off within same financial year

4. The purpose of preapring Comprehensive statements is to provide information to the various users on financial performance of the business during a finacial year.Financial performance is concerned with profitabiliity of the entity. It make users know potential changes in its economic resources ants is capacity to gernerate cash. It also makes the know about efficiency of its economic resorces

5. Finacial position reflects the change during a fiancial year and year end balance of the entity's assets and liabilites

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