ASSIGNMENT 1 . 6 PART A 1. Discuss fully the criteria to which each element must comply according to the Framework 2010 to be recognised in the financial statements. 2. What is your understanding of recognition of elements? 3. What is the objective of general purpose financial statements according to the Preface to IFRS.T? 4. What are the components of financial statements ? 5. The Framework 2010 distinguishes between fundamental qualitative characteristics and enhancing qualitative characteristics of financial information. What are the enhancing qualitative characteristics of financial information? List and discuss briefly in your own words? 6. Define the following elements and provide three examples for each: (a) Liabilities; (b) Expenses; (c) Income; and (d) Asset PART B Coco's Traders commenced with business on 1 January 2015. The following transactions were entered into during January 2015: 2 Coco deposits R450 000 as capital into the entities bank account. 4 Rented office space from Afro Properties at R30 000 per month. On the same day paid a deposit that is double the monthly rental and the January rental. 5 Purchased trade inventories payable on delivery (COD) for R75 000. Sold trade inventories on credit to Sipho, R22 500. The cost price of the trade inventories sold is R16 000, the amount is Payable 30 days after delivery 8 Purchased a delivery vehicle from City Motors for R150 000. Paid a deposit of R40 000. The balance will be paid before 30 June 2015. 12 Sold trade inventories for cash, R70 000. The cost price of the trade inventories is R54 000. 13 Purchased stationery on credit from ABC Stationers for R5 000. 15 Paid salaries, R28 000. 18 Sold trade inventories on credit to Paul, R36 000. The cost price of the trade inventories is R27 000. The amount is Payable 30 days after delivery. 21 Paid ABC Stationers the amount due. Paid for telephone expense, R4 800. Stationery on hand at 31 January 2015, R150. Trade inventories to the amount of R45 000 were Purchased from BQ Suppliers, payable 60 days after delivery 31 The owner took trade inventories with a cost price or R25 000 and a selling price of R32 000 for personal use. REQUIRED: a) Provided the effect of the transaction on the accounting equation (A = L + E) Hint Prepare a table with columns with the following headings: Assets, Liabilities, Equity, Capital, Income and Expenses b) Provide journal entries to recognise the transactions in the records (general journal of Coco's Traders for the month ended 31 January 2015. Note: Journal narrations are required. 23 24 27