) In each of the following separate cases at least one of the assumptions or concepts of the accounting conceptual framework has been violated.

Required:

Please identify accounting assumption(s) or concept(s) violated in each case.

1.The owner of Cars-r-Us bought a motor vehicle for his own use. He paid for the motor vehicle by writing a cheque on Cars-r-Us's account. He instructed the bookkeeper to debit the "Vehicle" account and credit the "Cash at Bank" account of Cars-r-Us for the amount paid for the vehicle.

__________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

2.The entire cost of a piece of equipment is charged to an expense account in the year the equipment was bought.

__________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

3.Because profit for the year was extremely small, no entry was done to make an allowance for doubtful debts (taking into consideration potential bad debts).

__________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

4.A firm had been charging depreciation on a building that it expected to use for 10 years, at the rate of one twentieth (10%) per annum. In the present year, the current cost of the building increased dramatically. This caused the accountant to double the depreciation expense.

__________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

Q2)

a)Identify the two methods of recording inventory transactions and how you can differentiate between the two by identifying the accounts in the trial balance.

__________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

b)Which inventory method provides the higher gross profit figure? Explain which inventory system provides the most information for inventory control purposes?

__________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________