Does the trial balance prove the accuracy of accounting work done? Explain your answer.

A Trial Balance in which the credit and debit accounts match does not prove that all transactions have
been recorded in the proper accounts. In other words, the trial balance may agree without disclosing
certain errors. 

What is adjusting entry?

Adjusting entries is an important part of accrual accounting. If adjusting entries are not made, your
balance sheet, profit and loss statement, income statement and cash flow statement will not be
accurate. Adjusting entries allow you to adjust income and expense totals to reflect your position more
accurately.

Prepaid Expense

Prepaid expenses are future expenses that have been paid but not yet used up or expired. The amount
of prepaid expenses that will be used up within one year are reported on a company's balance sheet as
a current asset, called an expense to the company.

 Asset Method

Under the asset method, a prepaid expense account (an asset) is recorded when the amount is
paid. Prepaid expense accounts include Office Supplies, Prepaid Rent, Prepaid Insurance, and
others.

 Expense Method

Under the expense method, the accountant initially records the entire payment as expense.

Depreciation

Depreciation is a systematic process for allocating the cost of an asset to the accounting periods in
which it is used up. Depreciation is necessary for measuring a company's net income in each accounting
period. It is associated with buildings, equipment, vehicles, and other physical assets which will last for
more than a year.

(After reading the single line method)

There are several methods in depreciating fixed assets. The most common and simplest is the straight-
line depreciation method. Under the straight-line method, the cost of the fixed asset is distributed
evenly over the life of the asset's life.
ALLOWANCE FOR UNCOLLECTIBLE ACCOUNTS

Allowance for Doubtful Accounts is a contra current asset account associated with Accounts Receivable.
The company is anticipating that some accounts will be uncollectible in advance of knowing the specific
account. When a specific account is identified as uncollectable, the Allowance for Doubtful Accounts
should be debited, and Accounts Receivable should be credited to the company.

Net realizable value (NRV)

(After reading the sample problem)

Take note that this amount is an estimate. There are several methods in estimating doubtful accounts.
These estimates are often based on the company's past experiences.

To recognize doubtful accounts or bad debts, an adjusting entry must be made at the end of the period. 

INVENTORY
(RECORDED USING THE PERIODIC INVENTORY SYSTEM)

A periodic inventory system is a form of inventory valuation where the inventory account is updated at
the end of an accounting period rather than after every sale and purchase. The method allows a
business to track its beginning inventory and ending inventory within an accounting year. In a
continuous inventory system, no continuous record of changes is kept.