Month: December 2011

Explain whether it is true by giving an example that the Trial Balance provides “arithmetic proof of the accuracy of the records, it does not provide “theoretical proof”

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It is true that Trial balance provides arithmetic proof of the accuracy of the records when the total of debits and credits agree and the trial balance is in balance merely indicating the equality of the debits and credits for the hundreds or thousands of transactions entered in the ledger. However, it does not provide … Read more

Explain what is a compound journal entry ?

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Compound journal entry is an entry having more than one debit or more than one credit   Example of compound journal entry: Factory land was bought (debit) for $500,000, with a downpayment of cash (credit) of $100,000 and a mortgage(credit) of $400,000    

Briefly explain the different types of Dividend-payout policies

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The different type of Dividend Pay-out policies can be roughly categorized as follows: The “bird-in-the-hand view, whereby the shareholders  or owners prefer to be paid high dividend. Here, the shareholders only think of getting immediate dividends over less certain and more distant capital gain. Pay a low payout ratio as shareholders prefer capital gains over … Read more