Question 1:

Al Omani (SAOG) one of the large manufacturing company based in Sohar, has made all the arrangements in the beginning of the year 2017, to give a bulk purchase order to their major supplier Khalid Traders a Partnership firm based in Mucat, in order to start the production in their new factory.

On 10th January 2017 Al Omani company purchased (goods for credit) materials worth OR.200,000 from

Khalid Traders .But Al Omani company agreed to pay the full amount only after 2 months ie,on 11th March 2017.

From the above scenario, you need to consider the following Two situations.

Situation-1

You are currently doing your OJT(On the job Training) in Khalid Traders accounts department, towards the end of training the head of accounts has asked you to answer the following.

Note: Khalid Traders is following Accrual basis of accounting,

a) At what date Khalid Traders need to identify and record the above transaction in the books of accounts, also discuss briefly about how Accrual basis of accounting is used for revenue recognition.

(2.5 marks Word Limit 50-80)

b) Do you think, the credit sale transaction of Khalid Traders initially leads to increase the account receivable of the business? Yes/No justify your answer.

(1 mark Word Limit 20-40)

c) Would you consider Khalid Traders partnership firms liability is limited? Yes/No Justify on your answer. Also discuss briefly any two advantages, if Jamal Traders change their partnership firm structure to LLC.

(1.5 marks Word Limit 40-70)

(Total 10 Marks)

Situation-1

You are recently joined in Al Omani (SAOG) Company as a junior account clerk, and the accounts manager has asked you to do the following tasks.

Note: Al Omani Company is following accrual basis of accounting.

a) At what date you need to identify and record the above transaction in the books of accounts, also discuss briefly about how accrual basis of accounting system is used for recording the above transaction.

(2.5 marks Word Limit 50-80)

b) Do you think, the credit purchase transaction initially leads to increase the account payable of the business? Yes/No comment briefly on your answer. (1 marks Word Limit 20-40)

c) Identify and discuss briefly about the source document, you need to refer before identifying and recording the above credit purchase transaction in the books of accounts.

(1.5 marks Word Limit 40-70)