1. Avia Ltd is a retail business which has a financial year end 31 December. On 30 November 2020, the accountant recorded the following journal entry and it was posted to the ledger:

Debit Credit

Inventory ( SFP) 20 000

Marathon Ltd ( SFP) 20 000

The amount of N$ 20 000 represents of the purchases of merchandise Marathon Ltd, a supplier of sugar products to retail business.

Required:

1. Identify the element, as per the Conceptual Framework Financial Reporting which was debited in the above journal entry. (2 mark)
2. Explain the element you have chosen in 2.1. Your explanation/motivation should only refer to the definition criteria of this element in accordance with the Conceptual Framework Financial Reporting. (4 marks)
3. Identify the element, as per the Conceptual Framework Financial Reporting, which was credited in the above journal entry. (2 marks)
4. Explain the element you have chosen in 2.3. Your explanation/motivation should only refer to the definition criteria of this element in accordance with the Conceptual Framework of Financial Reporting. (4 marks)