Question 1 Twitter Enterprise sells electrical products including washing machines, air conditioners, Water heaters and televisions. The following balances were extracted from the books of Twitter Enterprise as at 31 December 2019, Debit Credit List of Accounts (RM) (RM) Capital 363,600 Inventories as at 1 January 2019 22.500 Freehold Land 250,000 Motor Vehicles 96,000 Office Equipment 25.000 Accumulated Depreciation as at 1 January 2019 Motor Vehicles 38.400 Ofice Equipment 5.890 5% Fixed Deposit 50.000 Bank 55.800 Cash 2.470 Accounts Receivables 21.500 Accounts Payables 36,400 10% Loan from Bank FB 40,000 Purchases 115,600 Sales 265,000 Return Inwards 150 Return Outwards 800 Discounts Received 1.960 Discounts Allowed 570 Insurance on purchase 350 Bank Charges 1.000 Rental expense 9,600 Stationeries 800 Carriage expenses 4.800 Salaries 78,000 Utilities 8,460 General Expenses 8,280 Advertising Expenses 10,200 Commission received 9,000 Drawings 580 Allowances for Doubtful Debt as at 1 January 2019 610 761.660 761,660 Additional information 1. Inventories as at 31 December 2019 were valued at RM28,500 2. The Fixed Deposit account was opened on 1 July 2019 and interest is at 5% per annum. No interest has been received during the year. 3. The owner took cash RM1,000 and goods worth RM8,000 for personal use 4. The loan from Bank FB was taken on 1 January 2019. No interest has been paid on this loan at the end of accounting period. 5. Allowances for Doubtful Debt were to be adjusted to RM645. 6. 25% of carriage expenses were carriage inwards and the remainder were carriage outwards expenses. 7. Depreciation is to be provided as follows: Motor vehicles 10% on straight line method Office equipment 7% on reducing balance method 8. The following adjustments are to be considered for the period: Prepayments RM Accruals RM Commission received 2.000 Salaries 2.500 Stationeries 100 Utilities 500 Required: (a) Prepare the Statement of Profit or Loss for the year ended 31 December 2019. (7 marks) (6 marks) (b) Prepare the Statement of Financial Position as at 31 December 2019. (c) Explain the following terms: (1) Business entity (ii) Going concern (iii) Prudence (iv) Materiality