Question One

T accounts

Capital account
    Debit Credit  
Jan-17   Bank 20000
C/O 22500 Cash 2500
  B/F 22500

Bank account
  Debit Credit  
Capital 20000 B Brown 1924
Cash 200 Aberdeen 4370
20200 C/o 13906
B/F 13906

R
Hughes
  Debit Credit  
Jan-17 C/o 5000 cash 5000

cash Account
  Debit Credit
R Hughes 5000 Bank 200
Sales 1910
Sales 110
Capital 2500
Purchases 390 C/O 9710
9910 9910
B/F 9710

B
Brown
  Debit Credit  
Jan-17 Purchases 1530 Purchases Return 94
Purchases 488
Bank 1924 C/O 3848
3942 3942
B/F 3848
 Purchases Account
Debit Credit  
  B Brown 1530
  I Jess 4162
  B Brown 488
  Cash 390
C/o 6570 B/F 6570

I Jess
  Debit Credit  
Jan-17 Purchases 4162 Purchases Return 130
4162 C/O 4032
B/F 4032

Sales Account
  Debit Credit  
  Cash 1910
  H Rise 1374
  P Taylor 341
  G pate 535
  R Sim 262
  Cash 110
C/O 4532 B/F 4532

H rise
    Debit Credit  
Jan-17 Sales 1374 Sales Return 65
  C/o 1309
  1374
B/F 1309

P taylor
  Debit Credit  
Sales 341 C/O 341
B/F 341

Sales Return Account

    Debit Credit  
Jan-17 H Rise 65
G Pate 34 C/O 99
B/F 99

G Pate
  Debit Credit  
Sales
sales 535 Return 34
  C/O 501
B/F 501

R Sim
    Debit Credit  
Jan-17 Sales 262 C/O 262

Purchases Returns Account

  Debit Credit  
B Brown 94
I Jess 130 C/O 224
224
B/F 224

Aberdeen Account
  Debit Credit  
Bank 4370 Van 4370
Jan-17

Van
  Debit Credit  
Aberdeen 4370 C/o 4370
B/F 4370
 J Winter
  Debit Credit
Jan-17 Furnitures 180 Furnitures 1800
C/O 1620
1800 1800
B/F 1620

Furnitures
  Debit Credit  
J winter 1800 J Winter 180
365 C/o 1985
2165
B/F 1985

Question Two

Capital account
    Debit Credit  
Jan-17 C/O 10500 Cash 10500
10500

Bank account
  Debit Credit  
Capital 9000 Rent 220
B Baclay 2000 Van 6500
F Hood 900
M Smith 118
R Pleat 158
L Fish 370 c/o 5826
12546
B/F 5826

cash Account

  Debit Credit  
Capital 10500 Cash 9000
Purchases 550 Purchases 550
Sales 145 Salaries 790
B Baclays 500
A Tom 614 C/O 1969
12309
B/F 1969
T Dry
    Debit Credit  
Jan-17 C/0 800 Purchases 800
B/F 800

Purchases Account
  Debit Credit  
Cash 550
T Dry 800
F Hood 930
M Smith 160
G Low 510 C/O 2950
B/F 2950

F Hood
    Debit Credit  
Jan-17 Purchases 930
Purchases
Return 30
C/O 1860 Bank 900
B/F 1860

Sales Account
  Debit Credit  
R Tong 170
L Fish 240
M Signh 326
A Tom 204
Cash 145
L Fish 130
A Tom 410
C/O 1783 R Pleat 158
B/F 1783
 M
Smith
    Debit Credit  
Jan-17 Purchases 160
Purchases
C/O 202 return 42
B/F 202

G Low
  Debit Credit  
C/O 510 Purchases 510
B/F 510

Sales Return Account

    Debit Credit  
Jan-17 R Tong 5
M Singh 20 C/O 25
B/F 25

M Singh
  Debit Credit  
Sales
Sales 326 Return 20
B/F 306 C/O 306

A Tom
  Debit Credit  
Sales 204 Cash 614
Jan-17 410
614 614

Purchases Returns Account

  Debit Credit  
F Hood 30
M Smith 42 C/O 72
B/F 72
 Stationery Account
Debit Credit
Buttons
Ltd 89 C/O 89
Jan-17 B/F 89

Buttons Ltd
  Debit Credit  
C/O 89 Stationery 89
Jan-17 B/F 89

R Tong
  Debit Credit
Sales 170 Sales Return 5
Jan-17 C/O 165
B/C 165

L Fish
  Debit Credit  
Sales 240 Bank 370
Sales 130
370 370

  Rent Account
Debit Credit
Bank 220 C/o 220
Jan-17

  Fixtures Account  
Debit Credit
Chiefs Ltd 610 C/o 610

Chiefs Ltd
  Debit Credit
Jan-17 C/O 610 Fixtures 610
 Salaries
  Debit Credit  
Cash 790 C/0 790

Van Account
  Debit Credit
Jan-17 Bank 6500 C/O 6500
Jan-17

B Baclay
  Debit Credit  
C/O 2500 Bank 2000
Cash 500
B/F 2500

R Pleat
  Debit Credit  
Jan-17 Sales 158 158 bank
 Trial Balance
  Debit Credit
Capital Account   10500
Bank Account 5826
cash Account 1969
T Dry   800
Purchases 2950
F Hood   1860
Sales   1783
M Smith   202
G Low   510
Sales Return Account 25
M Singh 306
A Tom 614 614
Purchases Returns Account 72
Stationery Account 89
Buttons Ltd   89
R Tong 165
L Fish 370 370
Rent Account 220
Fixtures Account 610
Chiefs Ltd   610
Salaries 790
Van Account 6500
B Baclay   2500
R Pleat 158 158
  20664 19996

Question Three
i. Users of accounting information
Accounting provides useful information relating to business. Such information is used
directly or indirectly by the following interested parties.

Owners:
The owners are interested to know the operational results of the business (profit or loss) and
also to know the financial status of the business, because they are ultimate risk takers.

Creditors:
Creditors are the persons who owe money to the business. Both short term and long term
creditors need information. Short term creditors need the information to determine whether
the amount owing to them will be paid when falls due. Long term creditors are interested in
both solvency and liquidity of the business. They are interested to determine whether the
enterprise will be in a position to meet its commitment both payment of interest and principal
on time.

Investors:
Both present and potential investors need the information to judge the prospects of present
and potential investment in the business. Present investors need the information to decide
whether they should continue in the present investment or not. Prospective investors need the
information to decide whether to invest in the business or not.

Employees:
The interest of the employees in accounting information is related to that they want more
salary and other monetary incentives like, bonus, overtime payment etc. They are interested
in financial statements on account of various profit sharing and bonus schemes under which
they get a share in the profits of the business.

Government:
Government is interest in account statements and reports in order to see the performance of a
particular enterprise, its cost structure and income in order to impose income tax, excise duty,
commercial taxes etc., the business firms have to pay a part of profit to the Government as
tax.

Public:
The Public as consumers is interested in accounting statements in order to know whether the
control is exercised on controlling the expenses of the business and the price fixed is
reasonable. They can also judge whether the economic resources of the country are being
utilized for the benefit of common man or not.

Researchers:
Researchers are interested in accounting statements and reports in order to get data for
proving their thesis on which they are working and hence to complete their research project
and draw conclusions which may help in formulating future policies in their respect areas.

Management:
The management of an enterprise needs accounting information for planning controlling,
evaluation of performance and decision making.

Banks:
They are a crucial part of any business environment since they advance both short & long-
term loans to a business. Accounting information helps them in determining the credit
 worthiness of the organisation. Based on financial health of an organisation, the future terms
and conditions of credit are assessed by the Banks.

Regulatory and Tax Authorities:

Regulatory Authorities including the government agencies ensure that the accounting
information is prepared based on the accounting principles, standards and rules & regulations
governing the organisation. The primary objective is to protect the interest of the
stakeholders of the organisation. Correct tax evaluation is also done by the authorities after
analyzing the financial statements.

ii. The following are the qualities of good financial information that serve as the basis for
decision making purposes in accounting:

Relevance:
Information makes a difference in decision making. It should be relevant to the users.

Reliability:
Compiled data should provide information is verifiable, factual, and neutral.

Comparability:
The other attribute of good information should be used to compare different entities

Consistency:
Information is consistently presented from year to year or period to period making it easier to
follow.

iii. There are general rules and concepts that govern the field of accounting.
The phrase "generally accepted accounting principles" (or "GAAP") consists of three
important sets of rules: (1) the basic accounting principles and guidelines, (2) the detailed
rules and standards issued by the Financial Accounting Standards Board FASB and its
predecessor the Accounting Principles Board (APB), and (3) the generally accepted industry
practices.

If a company distributes its financial statements to the public, it is required to follow

generally accepted accounting principles in the preparation of those statements. Further, if a
company's stock is publicly traded, federal law requires the company's financial statements
be audited by independent public accountants. Both the company's management and the
independent accountants must certify that the financial statements and the related notes to the
financial statements have been prepared in accordance with GAAP.

GAAP is exceedingly useful because it attempts to standardize and regulate accounting

definitions, assumptions, and methods. Because of generally accepted accounting principles
we are able to assume that there is consistency from year to year in the methods used to
prepare a company's financial statements. And although variations may exist, we can make
reasonably confident conclusions when comparing one company to another, or comparing
one company's financial statistics to the statistics for its industry. Over the years the generally
accepted accounting principles have become more complex because financial transactions
have become more complex.
 References
F, Hood, 2008. Principles of Accounts. Prentice Hall. London
H, Averkamp, 2014. Accounting Principles. [Online] Obtained from:
http://www.accountingcoach.com/accounting-principles/explanation