QUESTION $2$

$(15$ Marks, $27$ minutes$)$

Mr$.$ Baker operates Dough Delights $($Pty$)$ Ltd $("$Dough$"),$ a thriving bakery specializing in artisan

bread and pastries. The business gained traction in $2021$ when it secured a contract with

Sweet Treat $($Pty$)$ Ltd $("$Sweet$"),$ a prominent distributor, resulting in increased revenue. To

manage her busy schedule, Mr$.$ Baker's cousin, Cherry, oversees the financials using an Excel

spreadsheet, organizing income into 'Bread' and 'Pastries' and expenses into categories such

as 'Ingredients,$\text{'}$ 'Utilities,$\text{'}$ 'Labor,$\text{'}\text{'}$ 'Delivery,$\text{'}$ and 'Miscellaneous.$\text{'}$

You've been tasked by Cherry to assist in preparing the financial statements for the year ended

$29$ February $2024.$ Upon examining the spreadsheet, you uncovered:

Revenue related information:

Sweet a customer of Dough pays outstanding$/$unpaid invoices on the $25$th of every month. On

$25$ February Dough received a payment of R$3840$ from Sweet. At this stage there was only

one invoice outstanding$/$unpaid pertaining to accounts receivable from Sweet to the amount

of R$2580.$ All differences between outstanding$/$unpaid invoices and actual payments are

always been taken into account when future invoices are settled by the client.

Required

write a memorandum to Mr$.$Baker and address the following issues:

a$.$ List the qualitative characteristics of useful financial information according to the Conceptual Framework for Financial Repo rting of $2018(4$ marks$)$

b$.$ In terms of the Conceptual Framework for Financial Reporting of $2018,$ discuss the recognition $($including the definition$)$ and measurement of the overpayment received and in the financial statements of Dough Delights $($Pty$)$ Ltd for the year ended $29$ February $2024,$ as noted when reading the revenue related information above. $(10$ marks$)$