The adoption of the realization and matching rules in preparing financial accounts requires a great deal of subjective judgement.

Required:

Write an essay examining whether it would be fairer, easier, and more meaningful to prepare financial accounts on a cash received/cash paid basis.

● explain what is meant by the accounting equation;
● define the terms ‘debit’ and ‘credit’;
● write up some simple ledger accounts;
● extract a trial balance;
● identify six errors not revealed in a trial balance.