QUESTION $1$

$[9$ Marks$]$

Makhanya Caf$,$ a leading chain of office cafes in Lesotho, has recently appointed you as the new account executive by the chairperson, Ms$.$ Amina Siddat. The cafe is currently in the stages of preparing its draft financial statements for the fiscal year ending on September $30,2021,$ and has encountered three issues:

Issue $1$:

On $15$ August $2021,$ Makhanya Cafe ordered $88$ bags of coffee beans from Kansa Coffee Beans at the price of R$2640.$ The coffee was delivered to Makhanya Cafe on $20$ September, but Ms Amina requested you not to recognize this credit transaction until cash payment is made to Kansa Barras.

Issue $2$:

On $26$ September $2021,$ Manil ordered $200$ cups of coffee from Makhanya Cafe to be delivered to Tom & Tim Agency on $28$ September. Due to shortage of coffee beans, $180$ cups of coffee were delivered on the actual day. Ms Amina argues that $200$ rather than $180$ cups of coffee should be recognised as the sales of the cafe.

Issue $3$

Due to high costs of preparing and producing the financial statements, Ms Amina

instructed that: "Given that the financial statements are seldom reviewed, it's advised not to compile the full set. Instead, focus on preparing only the Statement of Financial Position, Statement of Profit or Loss and Other Comprehensive Income, and Statement of Cash Flows as required by our banker".

REQUIRED:

Based on the conceptual framework, identify the assumptions or principles that are violated if you were to follow the suggestions of Ms Amina and explain how Makhanya Cafe should account for the above issues $1$ to $3$ in its financial statements.