VimalZarival and Rajesh Garg operate as estate agents in Mumbai. When their bookkeeper retired, Vimal decided to take over the financial aspect of the business. While updating records, Vimal was unsure about the treatment of a number of transactions- One month before the end of the financial year April 2011- March 2012, Vimal sent a cheque for Rs. 6,000 to the landlord. This was to cover the payment of rent for the next 12 months. Vimal decided not to record this payment because most of it was for the next financial year. The company purchased a new computer for Rs. 31,400, However, two months after the purchase, Rajesh noticed that the same computer was available in the market for Rs. 26,500, Now Vimal is not sure which value to record. One of their clients sent a cheque for Rs. 3,200, while the amount due was Rs. 2,300. Vimal is not sure which figure to enter in the financial records. Question (a). Explain how Vimal should treat each of the above transactions according to the appropriate accounting concepts. Question (b). Assume yourself as Vimal'saccountant; write him a document explaining why accounting concepts are integral part to bookkeeping and Double entry system.

College Accounting (Book Only): A Career Approach

13th Edition

ISBN:9781337280570

Author:Scott, Cathy J.

Publisher:Scott, Cathy J.

Chapter4: Adjusting Entries And The Work Sheet

Section: Chapter Questions

Problem 4A: Your client is preparing financial statements to show the bank. You know that he has incurred a...

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VimalZarival and Rajesh Garg operate as estate agents in Mumbai. When their bookkeeper retired, Vimal decided to take over the financial aspect of the business. While updating records, Vimal was unsure about the treatment of a number of transactions-

One month before the end of the financial year April 2011- March 2012, Vimal sent a cheque for Rs. 6,000 to the landlord. This was to cover the payment of rent for the next 12 months. Vimal decided not to record this payment because most of it was for the next financial year.
The company purchased a new computer for Rs. 31,400, However, two months after the purchase, Rajesh noticed that the same computer was available in the market for Rs. 26,500, Now Vimal is not sure which value to record.
One of their clients sent a cheque for Rs. 3,200, while the amount due was Rs. 2,300. Vimal is not sure which figure to enter in the financial records.

Question (a). Explain how Vimal should treat each of the above transactions according to the appropriate accounting concepts.

Question (b). Assume yourself as Vimal'saccountant; write him a document explaining why accounting concepts are integral part to bookkeeping and Double entry system.

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