Explain the users of accounting information, objectives of trial balance, and calculate closing retained earnings.

Hey, good to see you again. 1. Four users of accounting information: • Investors use accounting information to evaluate the profitability and financial health of a company before making investment decisions. • Creditors use it to assess a company's ability to repay loans before extending credit. • Management uses it for planning, controlling, and decision-making within the organization. • Government agencies use it for taxation purposes and to ensure compliance with regulations. 2. Four objectives of a trial balance: • To check the arithmetical accuracy of ledger accounts by ensuring that total debits equal total credits. • To locate errors that may have occurred during the posting of transactions to the ledger accounts. • To summarize all ledger balances in one place, providing a quick overview of the financial position. • To facilitate the preparation of financial statements such as the income statement and balance sheet. 3. Calculate Closing Retained Earnings: Step 1: Identify the components of retained earnings. Opening Retained Earnings: Rs. 20,000 Net Profit for the year: Rs. 40,000 Dividend paid: Rs. 15,000 Profit transfer to sinking fund: Rs. 6,000 Profit transfer to general reserve: Rs. 14,000 Step 2: Apply the formula for closing retained earnings. Closing Retained Earnings = Opening Retained Earnings + Net Profit - Dividends Paid - Transfers to Reserves Closing Retained Earnings = Rs. 20,000 + Rs. 40,000 - Rs. 15,000 - Rs. 6,000 - Rs. 14,000 Closing Retained Earnings = Rs. 60,000 - Rs. 35,000 Closing Retained Earnings = Rs. 25,000 The closing retained earnings are Rs. 25,000. 4. Prepare accounting equation for the transactions: The accounting equation is Assets = Liabilities + Owner's Equity. a) Business Started with cash and furniture of Rs. 20,000 and Rs. 30,000 respectively. Assets = Liabilities + Owner's Equity Cash (Rs. 20,000) + Furniture (Rs. 30,000) = 0 + Capital (Rs. 50,000) Rs. 50,000 = Rs. 0 + Rs. 50,000 b) Purchase plant of Rs. 10,000 and partial payment only Rs. 6,000 Assets = Liabilities + Owner's Equity Plant (Rs. 10,000) - Cash (Rs. 6,000) = Creditors (Rs. 4,000) + 0 Rs. 4,000 = Rs. 4,000 + Rs. 0 5. Prepare trial balance of following items: | Account Name | Debit (Rs.) | Credit (Rs.) | | :---------------- | :---------- | :----------- | | Machinery | 50,000 | | | Closing stock | 20,000 | | | Bank balance | 15,000 | | | Account receivable | 20,000 | | | Common stock | | 40,000 | | Bank loan | | 30,000 | | Salary payable | | 35,000 | | Total | 105,000 | 105,000 | The total debits equal total credits, so the trial balance is balanced. 6. Comparative Income Statement for XYZ Company: | Particular | 2024 (Rs.) | 2025 (Rs.) | Absolute Change (Rs.) | Percentage Change (%) | | :------------------- | :--------- | :--------- | :-------------------- | :-------------------- | | Sales revenue | 50,000 | 60,000 | 10,000 | 20.00 | | Less: Cost of goods sold | 40,000 | 30,000 | (10,000) | (25.00) | | Gross profit | 10,000 | 30,000 | 20,000 | 200.00 | Calculations: • Sales revenue: Absolute Change = 60,000 - 50,000 = 10,000 Percentage Change = (10,000)/(50,000) × 100 = 20\% • Cost of goods sold: Absolute Change = 30,000 - 40,000 = (10,000) Percentage Change = ((10,000))/(40,000) × 100 = (25)\% • Gross profit: Absolute Change = 30,000 - 10,000 = 20,000 Percentage Change = (20,000)/(10,000) × 100 = 200\% Send me the next one 📸