UNSW Business School School of Accounting . MANU ET VENTE UNSW SYDNEY Australia's Global University ACCT1501 Accounting and Financial Management 1A Term 2 2019 TUTORIAL WEEK 5 Solutions to Tutorial Questions Tutorial Questions: # DQ4.3, DQ4.5, DQ4.8, DQ4.13, P4.10, P4.13 DQ4.3 A chart of accounts is a listing of the titles of all the accounts of an entity. Each account is assigned a number. The number of account names listed in the chart of accounts is determined by the number of accounts contained in the entity's accounting records. The chart of accounts includes every account used by an entity. The more detailed information the company wants, the more accounts it will have. DQ4.5 A trial balance is a standard bookkeeping procedure to check whether certain errors have been made in posting the journal entries to the ledger. It is a test to see whether total debits equal total credits. DQ4.8 The basic point is that accounting records and financial statements need not be complex or expensive to be useful. Every manager needs to know how the business is performing and to be able to explain that to bankers and others. This performance goes beyond mere sales records, even if sales are the lifeblood of the firm. The accounting system provides information about profitability, cash flows, debts and other factors important to the business besides sales. Bankers and tax authorities want to know about such things, even if the businessman claims not to. It should be said also that the entrepreneur mentioned may well have an accounting system that fits the modest needs of his/her business well. He/she understands cost-benefit: accounting, like everything else, should be worth its cost. But he/she should ask himself/herself if he/she could be a better manager if he/she had more information, and perhaps accounting could help him/her there. 1
DQ4.13 Given the equality of debits and credits in a trial balance, the following errors may still remain in a set of accounting records: i an inaccuracy in the amount of the initial recording; ii a case of incorrect analysis of transaction; iii posting the correct amount to the wrong ledger account; iv failure to post both the debit and credit sides of one or more entries; v a compensating error, i.e., where a mistake in one transaction is exactly offset by a second error in another transaction in such a way that equality of debits and credits in the system as a whole is maintained; and vi recording a fictitious transaction. These errors should be guarded against by supervision or systematic checking, e.g .: i checking journal entries and ledger posting; ii perusing items in the trial balance; iii comparing amounts in the current trial balance with the figures in the trial balance for the previous period; and iv checking that all entries are based on authorised source documents. P4.10 1 General journal Date 2019 Particulars Ref April 1 Cash at bank 30 150 000 Share capital Opening capital received from Carlson 1 2 Delivery truck