Question
On 1st January 2019, Mr. Ahmed, invested OMR 6,000 to start a software company. He purchased 5 Desktop computers and necessary furniture for the business
On 1st January 2019, Mr. Ahmed, invested OMR 6,000 to start a software company. He purchased 5 Desktop computers and necessary furniture for the business OMR 1,200. But Mr. Ahmed did not bring any bill or invoice of the purchase of the computer and furniture. After the purchase, the price of the computers fell sharply. When asked about the bill, Mr. Ahmed advised his accountant to record the transaction in the current market price without any bill or invoice for the purchase of computer and furniture. By 10th of December 2019, Mr. Ahmed further informed his accountant that the business received an order worth OMR 5,800 together with an advance of OMR 800. The software to be delivered in January 2020. Mr. Ahmed wanted his accountant to record the order of OMR 5,800 as business revenue for the year 2019 and all his personal expenses including expense of food and clothing OMR 300 to be recorded as business expenses. Finally Mr. Ahmed directed the accountant not to prepare the financial statements or any other relevant accounts or reports of the business for the first year alone. But, needed to prepare all such reports of the business for two years or more together. Identify the accounting principles/concepts/conventions followed or violated in the case and explain in detail with the reason?
Step by Step Solution
3.48 Rating (155 Votes )
There are 3 Steps involved in it
Step: 1
The problem is deals with normal accounting mistakes done by the business owners during the course of business conduct In this we see that Mr Ahmed made the classic mistakes of 1 Not recording the ass...Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started