Mr. X started a retail outlet named "X Foods" in his. His friend Y asks him to record the transactions and assess his financial position. Mr. X is not convinced on accounting of the information as he is not sure about the need of accounting when he is earning good money. You as Mr. Y, help Mr. X to get an understanding about the term accounting, uses of accounting information - so that he can record the financial information and assess his financial position. Also, discuss any five accounting terms relevant to recording the financial information.
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- Mr. Anmol started a retail outlet of food corner named Anmol Foods in his locality and doing well in his food business. His friend Atul asks him to record the transactions and assess his financial position. Mr. Anmol is not convinced on accounting of the information as he is not sure about the need of accounting when he is earning good money. You as Mr. Atul, help Mr. Anmol to get an understanding about the term accounting, uses of accounting information - so that he can record the financial information and assess his financial position. Also, discuss any five accounting terms relevant to recording the financial information.Anmol started a retail outlet of food corner named Anmol Foods in his locality and doing well in his food business. His friend Atul ask him to record the transactions and assess his financial position. Mr. Anmol is not convinced on accounting of the information as he is not sure about the need of accounting when he is earning good money. You as Mr. Atul, help Mr. Anmol to get an understanding about the term accounting, uses of accounting information - so that he can record the financial information and assess his financial position. Also, discuss any five accounting terms relevant to recording the financial information.Mr. A started his own business. As it is a very small business with little investment and very less transactions, he does not want to hire any employees to record the transactions happening in the business. As he is not from an Accounting background, he finds it very difficult to understand how to classify the transactions and record. Some transactions are given to you to help him classify transactions category under A) Current Assets B) Current Liabilities C) Long term liabilities D) Long term Assets E) Contingent Liability. You are also required to guide him how you have classified a particular transaction by giving suitable reasons in the books of both the parties. Suppose Mr. A has purchased goods for using it in manufacturing from Mr. B on credit for RO 5000. A’s company borrowed money from Bank Muscat promising to repay it after 2 years. A Promised to deliver the goods to Mr. Z on June 1st Mr. Z paid the cash of RO. 2,500 before the goods were delivered to him.…
- Mr. Q started his own business. As it is a very small business with little investment and very less transactions, he does not want to hire any employees to record the transactions happening in the business. As he is not from an Accounting background, he finds it very difficult to understand how to classify the transactions and record. Some transactions are given to you to help him classify transactions category under A) Current Assets B) Current Liabilities C) Long term liabilities D) Long term Assets E) Contingent Liability. You are also required to guide him how you have classified a particular transaction by giving suitable reasons in the books of both the parties. i) Suppose Mr. A has purchased goods for using it in manufacturing from Mr. B on credit for RO 10,000. ii) Q’s company borrowed money from Bank Muscat promising to repay it after 2 years. iii) A Promised to deliver the goods to Mr.Z on July 1st 2020. Mr. Z paid the cash of RO. 2800 before the goods were delivered to…Toshib is struggling to understand the impact of certain business transactions on the financial statements. She has very little accounting knowledge and feels intimidated by all the accounting jargon thrown around by her accountant friends. One day around a braai she raised her frustrations and gave a list of transactions of which she doesn’t understand the impact on the financial statements. As she is a good friend of yours, you willingly offer your help and asked her to put her concerns in writing. The next morning a thank you note was delivered to your office with the following list of transactions she required clarity on: 1. On 1 July 20x9 I started the business by opening a bank account with R150 000 and transferred office furniture which I had from a previous venture with a second-hand value of R35 000. 2. During the first month the following transactions occurred: 2.1 Opened an account with Magna Suppliers and bought R200 000 merchandise. 2.2 Bought a delivery vehicle from Max…Your doctor got to know that you are studying accounting and he has bought some shares from XYZ company. He received a lengthy financial report, so you doctor requests your advice as weather he should contact the company to complain that the financial information is not understandable. Advice your doctor by justifying with GAAP priniciple
- You have recently been hired by Davis & Company, a small public accounting firm. One of the firm’s partners, Alice Davis, has asked you to deal with a disgruntled client, Mr. Sean Pitt, owner of the city’s largest hardware store. Mr. Pitt is applying to a local bank for a substantial loan to remodel his store. The bank requires accrual based financial statements but Mr. Pitt has always kept the company’s records on a cash basis. He does not see the purpose of accrual based statements. His most recent outburst went something like this: “After all, I collect cash from customers, pay my bills in cash, and I am going to pay the bank loan with cash. And, I already show my building and equipment as assets and depreciate them. I just don’t understand the problem.Mr. Pitt has relented and agrees to provide you with the information necessary to convert his cash basis financial statements to accrual basis statements. He provides you with the following transaction information for the fiscal…You have recently been hired by Davis & Company, a small public accounting firm. One of the firm’s partners,Alice Davis, has asked you to deal with a disgruntled client, Mr. Sean Pitt, owner of the city’s largest hardwarestore. Mr. Pitt is applying to a local bank for a substantial loan to remodel his store. The bank requires accrualbased financial statements but Mr. Pitt has always kept the company’s records on a cash basis. He does not seethe purpose of accrual based statements. His most recent outburst went something like this: “After all, I collectcash from customers, pay my bills in cash, and I am going to pay the bank loan with cash. And, I already show mybuilding and equipment as assets and depreciate them. I just don’t understand the problem.”Required:1. Explain the difference between a cash basis and an accrual basis measure of performance.2. Why, in most cases, does accrual basis net income provide a better measure of performance than net operatingcash flow?3. Explain the…What Would You Say? A fellow accounting student has difficulty understanding how the fundamental accounting equation stays in balance when a compound entry with one debit and two credits is recorded. Consider, for example, that a business bought equipment for 7,000, paid 3,000 in cash, and placed the remainder on account. This means that there are two credits and one debitone debit and one credit on the left side of the equation and the other credit on the right side of the equation. Explain to your fellow student how the equation stays in balance.
- You are the bookkeeper for a small but thriving business. You have asked the owner for the information you need to make adjusting entries for depreciation, supplies, insurance, and wages. He says that hes really busy and that what youve done so far is close enough. Explain the need for adjusting entries and their effect on the owners balance sheet and the bottom line on the income statement.R. Nelson invests his personal computer, with a fair market value of 2,500, in the business. How would this transaction be recorded? a. A debit to R. Nelson, Capital, 2,500. b. A credit to Cash, 2,500. c. A credit to Professional Fees, 2,500 d. A debit to Computer, 2,500.An accountant prepares a statement of financial position for a business. In this statement,the equity of the owner was shown next to the liabilities. This confused the owner, who argued: ‘My equity is my major asset and so should be shown as an asset on the statement of financial position.’ How would you explain this misunderstanding to the owner?