Question

a) Explain the use of a trial balance. b) Define debit and credit and explain how...

a) Explain the use of a trial balance.

b) Define debit and credit and explain how they are used for each type of account. Give examples. Also explain the "normal balance" of each type of account.

c) Define assets, liabilities, equity, revenue, expenses. Identify and explain each of the formal financial statements.

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Answer-a-Trial balance is used to check the arithmetic accuracy of accounts. Its checked wheter all account balances has done property. All debits are equal to all credits.

b-Debit is the left side of an account and credit is right side of an account. There are three types of accounts in which debits and credits used:-1- Under real account- Debit what comes in and credit what goes out. 2-Under Personal account -Debit the receiver and Credit the giver. 3- Under Nominal account- Debit all Expenses and losses and Credit all incomes and gains.

Normal balance is the difference of an account if its credit side is greater than debit side than it has credit balance and if debit side exceeds than it has debit balance.

C-Aseets-Assets are the properties of an owner.

Liabilities-liabilities are the amount owed by business

Equity- Equity is the owners capital

Revenue- Income earned by business.

Expenses-The amount paid to generate revenue.

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