Question

Instructions – PLEASE READ THEM CAREFULLY

• The Assignment must be submitted on Blackboard (WORD format only) via allocated folder.
• Assignments submitted through email will not be accepted.
• Students are advised to make their work clear and well presented, marks may be reduced for poor presentation. This includes filling your information on the cover page.
• Students must mention question number clearly in their answer.
• Late submission will NOT be accepted.
• Avoid plagiarism, the work should be in your own words, copying from students or other resources without proper referencing will result in ZERO marks. No exceptions.
• All answered must be typed using Times New Roman (size 12, double-spaced) font. No pictures containing text will be accepted and will be considered plagiarism).
• Submissions without this cover page will NOT be accepted.

Assignment Question(s):                                                   

Q1- Provide an example of each title here and then record the journal entries.

                                                                                                              

Following is the first given answer.

1-Purchasing Equipment for cash

Given answer:

ABC company purchased equipment for SAR20,000 cash .

Equipment 20,000

Cash                   20,000

2-Issuing common stocks receiving cash.

3-Providing service receiving cash.

4-Purchasing supplies on credit.

5-Borrowing money from a bank.

6-Paying employees their salaries.

Q2- What is the accrual basis of accounting? When should revenue and expense be recognized in the accrual basis? Provide an example.                         (1 Mark)

Q3- On your own words, explain the purpose and the importance of the income statement, and prepare the income statement for ABC company based on the following information taken from the trial balance in 2019.                               

Consulting revenue		SAR70,000
Rental revenue		30,000
Supplies expense	5,000
Rent expense	20,000
Wages expense	30,000

Answer 1

Q1

1) Already given in question

2) ABC Company issued stocks for $50000 in cash

	Debit	Credit
Cash	50000
Common stock		50000

3) Rendered Service for $2000 received in cash

	Debit	Credit
Cash	2000
Service revenue		2000

4) Purchased Supplies worth $6000 on Credit

	Debit	Credit
Supplies	6000
Accounts payable		6000

5) borrowed $60000 from bank

	Debit	Credit
Cash	60000
Bank loan		60000

6) Salaries paid $1000

	Debit	Credit
Salaries Expense	1000
Cash		1000

Q2)

Accrual basis of accounting is one principle followed in accounting for the purpose of recording of transaction

In Accrual basis, Transactions are recorded in due basis whether it income or Expense

For example, The service is rendered but not received the payment. In this case revenue will record by debiting Accounts receivable

Q3)

Income statement reflect the profitability of a business in certain period. it is very helpful for stakeholders to know about business

Income statement

Consulting Revenue	70000
Rental Revenue	30000
Total Revenue	100000
Less:
Supplies expense	5000
Rent Expense	20000
Wages Expense	30000
Total Expense	55000
Net profit	45000