RECORDING THE TRANSACTIONS

ACCOUNTING CYCLE

Step 1. TRANSACTION ANALYSIS

The accounting cycle refers to a series of sequential steps or procedures
performed to accomplish the accounting process. The steps in the cycle and The analysis of transactions should follow these four basic steps:
their aims follow:
1. Identify the transaction from source documents.
Step 1. Identification of events to be recorded 2. Indicate the accounts--either assets, liabilities, equity, income or expenses-
Aim: To gather information about transactions or events generally through the affected by the transaction.
source documents. 3. Ascertain whether each account is increased or decreased by the
transaction.
Step 2. Transactions are recorded in the journal. 4. Using the rules of debit and credit, determine whether to debit or credit the
Aim: To record the economic impact of transactions on the firm in a journal, account to record its increase or decrease.
which is a form that facilitates transfer to the accounts.
SOURCE DOCUMENTS
Step 3. Journal entries are posted to the ledger.
Aim: To transfer the information from the journal to the ledger for classification. Transactions and events are the starting points in the accounting cycle.

 Source documents identify and describe transactions and events entering

Step 4. Preparation of a Trial Balance.
the accounting process.
Aim: To provide a listing to verify the equality of debits and credits in the ledger.
 Transactions and events are the starting points in the accounting cycle.
Step 5.  Preparation of the Worksheet including adjusting entries.  Relying on source documents, transactions and events can be analyzed as
Aim:  To aid in the preparation of the financial statements. to how they will affect performance and financial position.
 Source documents identify and describe transactions and events entering
Step 6.  Preparation of the financial statements. the accounting process.
Aim:  To provide useful information to decision-makers.
These original written evidences contain information about the nature and the
Step 7.  Adjusting journal entries are journalized and posted. amounts of the transactions. These are the bases for the journal entries; some of
Aim:   To record the accruals, expiration of deferrals estimation and other events the more common source documents are sales invoices, cash register tapes,
from the worksheet. official receipts, bank deposit slips, bank statements, checks, purchase orders,
time cards and statements of account.
Step 8.  Closing journal entries are journalized and posted.
Aim:  To close temporary accounts and transfer profit to owner's equity.

Step 9.  Preparation of a post-closing trial balance.

Aim:  To check the equality of debits and credits after the closing entries.

Step 10.  Reversing journal entries are journalized and posted.

Aim:  To simplify the recording of certain regular transactions in the next
accounting period.  This cycle is repeated each accounting period.

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 usually made on the line below the credit. Generally, skip a line after each
entry.
THE GENERAL JOURNAL AND GENERAL LEDGER 3. Posting Reference (PR). This will be used when the entries are posted, that
is, until the amounts are transferred to the related ledger accounts.
4. Debit. The debit amount for each account is entered in this column.
5. Credit. The credit amount for each account is entered in this column.

 Illustration: Assume that Maria Concepcion Jennifer Perez-Manalo

established her own wedding consultancy with an initial investment
of P250,000 on May 1. The journal entry is: 

May 1   Cash                             P250,000

Perez-Manalo, Capital                               P250,000

                          Initial investment of Perez-Manalo.

                        

SIMPLE AND COMPOUND ENTRY         

In a simple entry, only two accounts are affected, one account is debited and
the other accounted is credited. An example of this is the entry to record the
initial investment of Perez-Manalo. However, some transactions require the
use of more than two accounts. When there are three or more accounts
required in a journal entry, the entry is referred to as a compound entry.  

THE JOURNAL

 A chronological record of the entity’s transactions.

STEP 2. TRANSACTIONS ARE JOURNALIZED
 Shows all the effects of a business transaction in terms of debits and  
credits.
 Each transaction is initially recorded in a journal rather than directly in the After the transaction or event has been identified and measured, it is recorded in
ledger. the journal. The process of recording a transaction is called journalizing.
 A journal is called the book of original entry.
The following are the transactions for Weddings "R" Us during the month of May.
The double-entry system will be used.
 
To understand the nature of the affected accounts, the letter A (for asset), L
Format.   (liability) OE (owner's equity) is inserted after each entry. In addition, owner's
equity is further classified into OE:I (income) and OE:E (expenses).
The standard contents of the general journal are as follows:
Note that the rules of double-entry system are observed in each transaction:
1. Date. The year and month are not rewritten for every entry unless the year
or month changes or a new page is needed. 1. Two or more accounts are affected by each transaction.
2. Account Titles and Explanation. The account to be debited is entered at 2. The sum of the debits for every transaction equals the sum of the credits.
the extreme left of the first line while the account to be credited is entered 3. The equality of the accounting equation is always maintained.
slightly indented on the next line. A brief description of the transaction is

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 Note Issued for Cash (Source of Assets)

May 2. Maria Concepcion Jennifer Perez-Manalo issued a promissory note for

210,000 loan from Metrobank. This availment will be used for the acquisition of
a service vehicle. The note carries a 20% interest per annum. The arrangement
with the bank is that both the interest and the principal are payable in full in
one year.
Initial Investment (Source of Assets)
 
May 1. Maria Concepcion Jennifer Perez-Manalo is a social entrepreneur from
the South. She is into a lot of interesting causes. Her fine  taste is preeminent Analysis: Assets increased. Liabilities increased.
such that she is considered an authority in planning weddings. Upon the advice Rules: Increases in assets are recorded by debits. Increases in liabilities are
and prodding of an esteemed colleague, Bendalyn Landicho, Perez-Manalo recorded by credits.
decided to organize her wedding consultancy. She invested P250,000 into this Entry: Increase in assets is recorded by a debit to cash. Increase in liabilities is
entity. recorded by a credit to notes payable.

Analysis: Assets increased. Owner's equity increased.  

Rules: Increases in assets are recorded by debits. Increases  in owner's equity
are recorded by credits. Journal entry:
Entry: Increase in assets is recorded by a debit to cash, Increase in owner's
May 2 Cash (A)                                              P210, 000
equity is recorded by a credit to Perez-Manalo, Capital.
           Notes Payable (L)                                                P210, 000
Journal entry:
                To record promissory note issued to Metrobank.
May 1  Cash (A)                                               P250, 000
                 
Perez-Manalo, Capital (OE)                        P250, 000
Hiring of Office Personnel
                          To record initial investment.
May 2. Hired an office assistant and an accountant executive each with a 7,800
  monthly salary. Or each, is to receive 300 per day for the 26-day work month.
Rent Paid in Advance (Exchange of Assets)
 
May 1. Rented office space and paid two months’ rent in  advance, P8,000.
No entry is necessary at this point. They started working immediately.
Analysis: Assets increased. Assets decreased.
Rules: Increases in assets are recorded by debits. Decreases in assets are  
recorded by credits.
Service Vehicle Acquired for Cash (Exchange of Assets)
Entry: Increase in assets is recorded by a debit to prepaid rent. Decrease in
assets May 4. Acquired service vehicle for P420, 000
is recorded by a credit to cash.
Analysis: Assets increased. Assets decreased
Journal entry: Rules: Increases in assets are recorded by debits. Decreases by credits.
Entry: Increase in assets is recorded by a debit to service vehicle. Decrease in
May 1 Prepaid Rent (A)                            P8,000 assets is recorded by a credit to cash.
                Cash (A)                                                 P8,000  
                    To record two months advance rent. Journal entry:
  May 4 Service Vehicle (A)                       P420, 000

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                Cash (A)                                       P420, 000 May 5 Office Equipment (A)                    P60, 000

                     To record acquisition of service vehicle.            Cash (A)                                             P15, 000

                 Accounts Payable (L)                         45,000

                   To record purchase of equipment.

Insurance Premium Paid (Exchange of Assets)

Supplies Purchased on Account (Source of Assets)
May 4. Paid Prudential Guarantee and Assurance, Inc. 14,400 for one-year
comprehensive insurance coverage on the service vehicle. May 8. Purchased supplies on credit for 18,000 from San Jose Merchandising.

Analysis: An asset increase. Another asset decreased Analysis: Assets increased. Liabilities increased.
Rules: Increases in assets are recorded by debits. Decreases in assets are Rules: Increases in assets are recorded by debits. Increases in liabilities are
recorded by credits. recorded by credits.
Entry: Increase in assets is recorded by a debit to prepaid insurance. Decrease Entry: Increase in assets is recorded by a debit to supplies. Increase in
in assets is recorded by a credit to cash. liabilities is recorded by a credit to accounts payable

 
Journal entry:
Journal entry:
May 8 Supplies (A)                                         P18, 000
May 4 Prepaid Insurance (A)                  P14, 400
                 Accounts Payable (L)                                 P18, 000
               Cash (A)                                                 P14, 400
                    To record purchase of supplies on credit.
                   To record payment of insurance.
 
 
Accounts Payable Partially Settled (Use of Assets)
Office Equipment Acquired on Account (Exchange and Source of Assets)
May 9 Paid San Jose Merchandising P10, 000 of the amount owed.
May 5. Acquired office equipment from Fair and Square Emporium for 60,000;
paying 15,000 in cash and balance next month Analysis: Assets decreased. Liabilities decreased.
Rules: Decreases in assets are recorded by credits. Decreases in liabilities are
Note. A compound entry is needed for this transaction. recorded by debits.
Entry: Decrease in liabilities is recorded by a debit to accounts payable.
  Decrease in assets is recorded by a credit to cash.
Analysis: Assets increased. Assets decreased. Liabilities increased. Journal entry:
Rules: Increases in assets are recorded by debits. Decreases in assets are
recorded by credits Increases in liabilities are recorded by credits. May 9 Accounts Payable (L)                      P10, 000
Entry: Increase in assets is recorded by a debit to office equipment. Decrease in
assets is recorded by a credit to cash. Increase in liabilities is recorded by a                  Cash (A)                                                  P10, 000
credit to accounts payable.
                     To record payment of account to San Jose Merchandising.
 
 
Journal entry:
Revenues Earned and Cash Collected (Source of Assets)
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May 10. Coordinated and finalized simple bridal arrangements for three couples  
and collected fees of 8,800 per couple. Services include prospecting and
selecting the church and reception location, couturier, caterer, car service, Journal entry:
flowers,, souvenirs and invitations.
May 5 Cash (A)                                     P10,000
Analysis: Assets increased. Owner’s equity increased.
Rules: Increases in assets are recorded by debits. Increases in owner’s equity                 Unearned Referral Revenues (L)           P10,000
are recorded by credits.
Entry: Increase in assets is recorded by a debit to cash. Increase in owner’s                   To record cash received.
equity is recorded by a credit to consulting revenues.
 Revenues Earned on Account (Source of Assets)
Journal entry:
May 19. Coordinated and finalized elaborate bridal arrangements for three
May 10 Cash (A)                                    P26, 400 couples and billed fees of P12, 000 per couple. Additional services include
documents preparation, consultation with a feng shui experts as to the ideal
                    Consulting Revenues (OE: I)             P26, 400 wedding date for prosperity and harmony, provision for limousine service and
honeymoon.
                          To record revenue earned.
Analysis: Assets increased. Owner’s equity increased.
  Rules: Increases in assets are recorded by debits. Increases in owner’s equity
are recorded by credits.
Salaries Paid (Use of Assets) Entry: Increase in assets is recorded by a debit to to accounts receivable.
Increase in owner’s equity is recorded by a credit to consulting revenues.
May 13. Paid salaries 6,600. The entity pays salaries every two Saturdays.
 
Analysis: Assets decreased. Owner’s equity decreased.
Rules: Decreases in assets are recorded by credits. Decreases in owner’s equity Journal entry:
are recorded by debits.
Entry: Decrease in owner’s equity is recorded b a debit to salaries expense. May 19 Accounts Receivable (A)                 P36,000
Decrease in assets is recorded by a credit to cash.
                    Consulting Revenues (OE:I)                      P36,000

Journal entry:                        To record services rendered on account.

May 13 Salaries Expense (OE:E).                 P6, 600  

                    Cash (A)                                                  P6, 600 Withdrawal of Cash by Owner (Use of Assets)

                       To record payment of salaries. May 25. Perez-Manalo withdrew 14,000 for personal expenses.

  Analysis: Assets decreased. Owner’s equity decreased.

Rules: Decreases in assets are recorded by credits. Decreases in owner’s equity
Unearned Revenues Collected (Source of Assets) are recorded by debits.
Entry: Decrease in owner’s equity is recorded by a debit to Perez-Manalo,
May 15. The entity is earning additional revenues by referring consulting clients Withdrawals. Decrease in assets is recorded to cash.
to friendly hotels, caterers, printers and couturiers. Received 10,000 advance
fees for three clients referred.    

Analysis: Assets increased. Liabilities increased. Journal entry:

Rules: Increases in assets are recorded by debits. Increases in liabilities are
recorded by credits. May 25 Perez-Manalo, Withdrawals (OE)      P14,000
Entry: Increase in assets is recorded by a debit to cash. Increase in liabilities is
recorded by a credit to unearned referral revenues.                     Cash (A)                                                P14,000

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                       To record Perez-Manalo’s withdrawal. by a credit to utilities payable.

Salaries Paid (Use of Assets) Journal entry:

May 27. Paid salaries, P7, 200. May 30 Cash (A)                       P24, 000

Analysis: Assets decreased. Owner’s equity decreased.                    Accounts Receivable (A)                       P24, 000
Rules: Decreases in assets are recorded by credits. Decreases owner’s equity are
recorded by debits.                       To record cash received from credit clients.
Entry: Decrease in owner’s equity is recorded by a debit to salaries expense.
Decrease in assets is recorded by a credit to cash. Expenses Incurred and Paid (Use of Assets)

Journal entry: May 31. Settled the electricity bill of 3,000 for the month.

Analysis: Assets decreased. Owner’s equity decreased.

May 27 Salaries Expense (OE: E)               P7, 200
Rules: Decreases in assets are recorded by credits. Decreases in owner’s equity
                    Cash (A)                                             P7, 200 are recorded by debits.
Entry: Decrease in owner’s equity is recorded by a debit to utilities expense.
                       To record payment of salaries. Decrease in assets is recorded by a credit to cash.

  Journal entry:

Expenses Incurred but Unpaid (Exchange of Claims) May 30 Utilities Expense (OE: E)              P3, 000

May 30. Received the ICC-Bayante telephone bill, 1,400.                     Cash (A)                                             P3, 000

Analysis: Liabilities increased. Owner’s equity decreased.                        To record payment of electricity bill.
Rules: Increases in liabilities are recorded by credits. Decreases in owner’s
equity are recorded by debits.
Entry: Decrease in owner’s equity is recorded by a debit to utilities expense.
Increase in liabilities is recorded by a credit to utilities payable. THE LEDGER

 
 A grouping of the entity's accounts is referred to as a ledger.
Journal entry:  It is called the "reference book" of the accounting system and is
 It is used to classify and summarize transactions, and to prepare data for
May 30 Utilities Expense (OE: E)                     P1, 400 basic financial statements.

                    Utilities Payable (L)                       P1, 400

The accounts in the general ledger are classified into two general groups:
                        To record unpaid telephone bill.
1. Balance sheet or permanent accounts (assets, liabilities and owner's equity).
  2. Income statement or temporary accounts (income and expenses). Temporary
or nominal accounts are used to gather information for a particular
Accounts Receivable Partially Collected (Exchange of Assets) accounting period. At the end of the period, the balances of these accounts
are transferred to a permanent owner's equity account.
 May 30. Received 24,000 from two clients for services billed last May 19.

Analysis: An asset increased. Another asset decreased. Each account has its own record in the ledger. Every account in the ledger
Rules: Increases in assets are recorded by debits. Decreases as credits. maintains the basic format of the T-account but offers more information (e.g. the
Entry: Increase in assets is recorded by a debt to cash. Decrease in assets is account number at the upper right corner and the journal reference column).
recorded by a credit to accounts receivable. Compared to a journal, a ledger organizes information by account.

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 Step 3. POSTING
Posting means transferring the amounts from the journal to the appropriate
accounts in the ledger. Debits in the journal are posted as debits in the ledger,
and credits in the journal as credits in the ledger.

The steps are as follows:

1. The ledger.
2. Transfer the page number from the journal to the journal reference (J.R.)
column of the ledger.
CHART OF ACCOUNTS 3. Post the debit figure from the journal as a debit figure in the ledger and the
credit figure from the journal as a credit figure in the ledger.
 A listing of all the accounts and their account numbers in the ledger is 4. Enter the account number in the posting reference column of the journal
known as the chart of accounts.
 The chart is arranged in the financial statement order, that is, assets first,
followed by liabilities, owner's equity, income and expenses.
 The accounts should be numbered in a flexible manner to permit indexing
and cross-referencing.

When analyzing transactions, the accountant refers to the chart of accounts to

identify the pertinent accounts to be increased or decreased. If an appropriate

once the figure has been posted to the ledger.

5.

LEDGER ACCOUNTS AFTER POSTING

At the end of an accounting period, the debit or credit balance of each account
must be determined to enable us to come up with a trial balance.
account title is not listed in the chart, an additional account may be added.
Presented below is the chart of accounts for illustration:  Each account balance is determined by footing (adding) all the debits and
credits.
 If the sum of an account's debits is greater than the sum of its credits, that
account has a debit balance.

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 If the sum of its credits is greater, that account has a credit balance. Step 4. TRIAL BALANCE
The trial balance is a list of all accounts with their respective debit or credit
balances. It is prepared to verify the equality of debits and credits in the ledger
Illustration: The ledger accounts of Weddings “R” Us after posting are shown at the end of each accounting period or at any time the postings are updated.
below. The account numbers and journal reference are purposely omitted. The
 

The procedures in the preparation of a trial balance follow:

1. List the account titles in numerical order.

2. Obtain the account balance of each account from the ledger and enter the
debit balances in the debit column and the credit balances in the credit
column.
3. Add the debit and credit columns.
4. Compare the totals.

The trial balance is a control device that helps minimize accounting errors.
When the totals are equal, the trial balance is in balance. This equality
provides an interim proof of the accuracy of the records but it does not signify
the absence of errors. For example, if the bookkeeper failed to record payment
of rent, the trial balance columns are equal but in reality, the accounts are
incorrect since rent expense is understated and cash overstated.

The trial balance for the illustration follows:

balance of each account 

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LOCATING ERRORS For example, assume that the cash account balance is P21,750, but in copying
the balance into the trial balance the figures are transposed and written as
P21,570. The resulting error amounted to P180 and is divisible by 9:

 Another common error is the slide, or incorrect placement of the decimal point,
as when P21,750.00 is copied as P2,175.00. The resulting discrepancy in the
trial balance will also be an amount divisible by 9.

Assume that the office equipment account has a debit balance of P42,000 but it
An inequality in the totals of the debits and credits would automatically signal is erroneously listed in the credit column of the trial balance. This will cause a
the presence of an error. These errors include: discrepancy of two times P42,000 or P84,000 in the trial balance totals. Since
such errors as recording a debit in a credit column are common, it is advisable,
1. Error in posting a transaction to the ledger: after determining the discrepancy in the trial balance totals, to scan the
columns for an amount equal to exactly one-half of the discrepancy.
a) an erroneous amount was posted to the account It is also advisable to look over the transactions for an item of the exact amount
b) a debit entry was posted as a credit or vice versa. of the discrepancy. An error may have been made by recording the debit side of
c) a debit or credit posting was omitted. the transaction and forgetting to enter the credit side.

2. Error in determining the account balances:  

a) a balance was incorrectly computed. 3. Compare the accounts and amounts in the trial balance with that in the
b) a balance was entered in the wrong balance column. ledger. Be certain that no account is omitted.
4. Recompute the balance of each ledger account.
5. Trace all postings from the journal to the ledger accounts. As this is done,
3. Error in preparing the trial balance: place a check mark in the journal and in the ledger after each figure is
verified. When the operation is completed, look through the journal and the
a) one of the columns of the trial balance was incorrectly added. ledger for unchecked amounts. In tracing postings, be alert not only for
b) the amount of an account balance was incorrectly recorded on the trial errors in amount but also for debits entered as credits, or vice versa.
balance.
c) A debit balance was recorded on the trial balance as a credit or vice Note that even when a trial balance is in balance, the accounting records may
versa, or a balance was omitted entirely. still contain errors. A balanced trial balance simply proves that, as recorded,
debits equal credits. The following errors are not detected by a trial balance:
 
 
What is the most efficient approach in locating an error?
1. Failure to record or post a transaction.
 
2. Recording the same transaction more than once.
The following procedures when done in sequence may save considerable time 3. Recording an entry but with the same erroneous debit and credit amounts.
and effort in locating errors: 4. Posting a part of a transaction correctly as a debit or credit but to the wrong
account.
1. Prove the addition of the trial balance columns by adding these columns in
the opposite direction.
2. If the error does not lie in addition, determine the exact amount by which
the trial balance is out of balance. The amount of the discrepancy is often a
clue to the source of the error. If the discrepancy is divisible by 9, this
suggests either a transposition (reversing the order of numbers) error or a
slide (moving of the decimal point).

9
 Correct Answer

  
(A) - (D) - (B) - (C)
 

  
(B) - (C) - (D) - (A)
 
The accounting cycle begins by recording transactions in the form
of
After a business transaction has occurred, entries are recorded in
   the
reversing entry
 
  
Subsidiary Ledger
    
adjusting entry
  Correct!

  
   General Journal
closing entry  
 
Correct!   
General Ledger
    
journal entry
 
  
Worksheet
 
Arrange the following items in the order of the accounting cycle.
A. Record transactions into the books of original entry
Which trial balance lists all the business accounts before
B. Make period-end adjustments year-end adjusting journal entries are made?
C. Prepare financial statements
  
D. Post transactions to the general ledger Post-closing Trial Balance
 
   Correct Answer
(A) - (B) - (C) - (D)
You Answered   
Unadjusted Trial Balance
    
(A) - (C) - (D) - (B)
  You Answered

10
      
Adjusted Trial Balance B only
   

     
Pre-closing Trial Balance A and C only
 

  
A only
This trial balance is created after adjusting journal entries have been
recorded.
Entries that are made at the end of a period to correct accounts
before financial statements are prepared.
  
Correct! Post-closing Trial Balance
You Answered
  
Adjusting entries   
  Pre-closing Trial Balance
 
  
Reversing entries   
  Unadjusted Trial Balance
 
   Correct Answer
Journal entries
    
Adjusted Trial Balance
  
Closing entries

A tool used to help bookkeepers and accountants complete the

accounting cycle.
Which of the following is/are the purpose(s) of preparing a trial
balance? Correct!

A.  Prevent fraud   
Accounting worksheet
B.  Ensure equality of debit and credit balances among the journal entry  

C.  Detect errors in the ledger.

  
Correct Answer Excel
 
  
B and C only
  
 Answered
Google Form

11
   
Correct!
  
T-accounts   
  Closing entries
 

Entries made to transfer temporary account balances to permanent Accounts with balances that are carried over to future years.
accounts.
  
Reality accounts
  
 
Journal entries
 
  
Nominal accounts
  
 
Adjusting entries
 
  
Temporary accounts
  
 
Reversing entries
  Correct!
Correct!
  
Permanent accounts
  
 
Closing entries
 

Entries made to transfer temporary account balances to permanent

Entries made to transfer temporary account balances to permanent accounts.
accounts.
Correct!

     
Journal entries Closing entries
   

     
Adjusting entries Journal entries
   

     
Reversing entries Adjusting entries
12
   

     
Reversing entries None of the answers
   

A source document in accounting is  What is common about source documents

You Answered
  
   the transaction date, name of buyer, description of items sold, amount and
None of the answers
terms.
   

     
The origin of information that is taken from the books of accounts.
What is common about source documents
   
Correct Answer
  
All the answers
  
  the amount, names of both the seller and buyer, date and description of the
Correct Answer transaction
 
  
You Answered
The origin of information that is recorded in the books of accounts
 
  
the seller's name, the amount, description of the items sold and document
number
Credit memoranda are issued when

  
What is common about source documents
checks deposited are returned for insufficient funds
 
Correct!   
the transaction date, name of buyer, description of items sold, amount and
   terms.
goods are returned to the seller by the purchaser.  
 
  
   What is common about source documents
goods are delivered to the buyer.  
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Correct Answer
  
   Shredded for privacy as soon as possible
the amount, names of both the seller and buyer, date and description of the  
transaction
 
You Answered Without the use of the trial balance,wered
  
the seller's name, the amount, description of the items sold and document   
number double-entry system will not be applied in accounting.

  
problems will not be determined.

What should be done with the source documents?   

ratio analysis cannot be achieved.
 
  
Given back to the payee. Correct Answer
Correct!
  
   inequality between debits and credits cannot be determined.
Should be filed and kept for at least 10 years.
 
The first financial statement that is prepared from the trial balance
   is the
Should be filed and kept for at least 5 years.
 
  
Statement of Changes in Equity
  
Shredded for privacy as soon as possible
   
Statement of Cash Flow

What should be done with the source documents?   

Income Statement

     
Given back to the payee. Statement of Financial Position

Which of the following situations will cause total debit balance to

   be smaller than the total credit balance?
Should be filed and kept for at least 10 years.
Correct Answer
 
  
   The amount extracted from a creditor’s accounted is posted to the wrong side of
Should be filed and kept for at least 5 years. the trial balance.Answered
 
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The amount extracted from a debtor account is posted as P2,500 instead of
P25,000 in the trial balance.

  
The acquisition of machinery is recorded in the equipment account.
 

  
Sales discounts are posted on the wrong side of the trial balance.

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