Question

In: Accounting

There are external and internal users of accounting information. Which of the following will be considered...

There are external and internal users of accounting information. Which of the following will be considered as an external user of accounting information for Gizmo Traders?

(a) Employees, investors and lenders of Gizmo Traders

(b) Investors and lenders of Gizmo Traders as well as government and their agencies.

(c) Management, employees and customers of Gizmo Traders.

(d) The general public, customers of Gizmo Traders and Gizmo Traders suppliers and other trade creditors.

(e) Employees and lenders of Gizmo Traders as well as the general public

(1) a,b,c and d.

(2) a,b,c and e.

(3) b and d only.

(4) a and c only.

(5) b, c and d.

2. Middy Garden Services provides you with the following information at 28 February 20.9.

R

Machinery 60 000

Bank 250 000

Vehicles 100 000

What is the net asset value (equity) of Middy Garden Services as at 28 February 20.9?

R

(1) 445 000

(2) 450 000

(3) 440 000

(4) 435 000

(5) 405 000

3. Which of the following statements are correct?

(a) When income earned by an entity is more than its expenditure, the entity makes a profit.

(b) When the income earned by an entity is less than its expenditure, the entity makes a profit.

(c) The profit that an entity makes, increases the net worth of the owner.

(d) The loss that an entity makes, decreases the net worth of the owner.

(e) The statement of financial position measures the financial performance of an entity.

(1) a,b,c,d and e.

(2) a,b,c and e.

(3) a,c,d,and e.

(4) a,b,c and d.

(5) a,c,and d.

4. Gizmo Traders bought a new electricity generator, to be used during load shedding, from Luna Lights for R50 000 and paid for it through an electronic funds transfer (EFT). What effect will the above transaction have on the accounting equation if Gizmo Traders has a favourable bank balance?

Equity = Assets - Liabilities

(1) +R50 000 +R50 000 0

(2) 0 ±R50 000 0

(3) +R50 000 0 +R50 000

(4) +R100 000 +R50 000 -R50 000

(5) 0 0 ±R50 000

5. On 29 March 20.9, the bookkeeper of Gizmo Traders recorded the cash sales of R5 750 for the day. Which of the following represents the correct posting for the above transaction?

Journal VAT input VAT output Sales

(1) Cash receipts journal R750 - R5 000

(2) Cash payments journal - R750 R5 000

(3) Cash receipts journal R750 - -

(4) Cash receipts journal - R750 R5 000

(5) Cash payments journal - R750 R5 000

Expert Solution

1) external users does not include employee and management . It normally includes investors landers government agencies public therefore the answer is 3 (B and D only)

2) net asset value includes all the asset less the liabilities. In the given question all the three are assets but the total of all these is 410,000 which is not given in the options. Also so there are no current liabilities in the question hence total answer is 410,000

3) when income earned is more than expenditure it is profit. Profit increases the net worth of the owner mother and lost decreases the net worth of the owner.also the statement of financial position measures the financial performance of an entity

Show the correct answer is 3 ( a,c,d,e)

4) asset bought by paying for electronic fund transfer will have a zero effect on the assets on the one hand fixed asset will increase on the other hand bank will decrease therefore the correct answer is 2

5) cash sales of 5,750 will have the effect on cash receipt journal where in sales will be recorded at an amount of 5,000 and as it is sales so Vat output will be recorded at 750.

Therefore the correct answer is 4.

ekkarill92 answered 1 year ago

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