Question 2 a) Discuss the following accounting concepts: going-concem, conservatism, and the matching concept, giving examples...

Transcribed Image Text:

Question 2 a) Discuss the following accounting concepts: going-concem, conservatism, and the matching concept, giving examples of how they may be applied in the financial reports. You must use relevant academic literature in your answer. (10 marks) b) Discuss three differences between the Income Statement and the Balance Sheet (statement of financial position). You must use relevant academic literature in your answer. (10 marks) c) ADB Ltd has the following trial balance as at 31" December 2020 3 Sales 150,000 Motor Vehicles 90,000 Accumulated Depreciation for Motor Vehicles 45,000 Opening Stock (as of 1 Jan. 2020) 15,000 Salaries expense 20,000 Accounts Receivables 75,000 Fees received 45,000 Cash 40,000 Purchases 50,000 Notes Payables 40,000 Rent Expenses 10,000 Utilities Expense 25,000 Machines 60,000 Accumulated Depreciation for Machines 30,000 75,000 Share Capital 385,000 385,000 The following information is also available: - (1) Closing stock at the 31st December 2020 is 10,000 (2) Included in Utilities expense costs of 12,000 which are paid for the year ended on 30th June 2021. (3) Late rent of 10,000 is due and has not been paid or included in the rent expense yet. (4) Depreciation follows straight line method 20% for Motor Vehicles and 10% for Machines. Required Showing full workings, you are required to; - Prepare an Income Statement and a Balance Sheet for ADB Ltd as at 31" December 2020. (40 marks) (Total of 60 marks) Question 2 a) Discuss the following accounting concepts: going-concem, conservatism, and the matching concept, giving examples of how they may be applied in the financial reports. You must use relevant academic literature in your answer. (10 marks) b) Discuss three differences between the Income Statement and the Balance Sheet (statement of financial position). You must use relevant academic literature in your answer. (10 marks) c) ADB Ltd has the following trial balance as at 31" December 2020 3 Sales 150,000 Motor Vehicles 90,000 Accumulated Depreciation for Motor Vehicles 45,000 Opening Stock (as of 1 Jan. 2020) 15,000 Salaries expense 20,000 Accounts Receivables 75,000 Fees received 45,000 Cash 40,000 Purchases 50,000 Notes Payables 40,000 Rent Expenses 10,000 Utilities Expense 25,000 Machines 60,000 Accumulated Depreciation for Machines 30,000 75,000 Share Capital 385,000 385,000 The following information is also available: - (1) Closing stock at the 31st December 2020 is 10,000 (2) Included in Utilities expense costs of 12,000 which are paid for the year ended on 30th June 2021. (3) Late rent of 10,000 is due and has not been paid or included in the rent expense yet. (4) Depreciation follows straight line method 20% for Motor Vehicles and 10% for Machines. Required Showing full workings, you are required to; - Prepare an Income Statement and a Balance Sheet for ADB Ltd as at 31" December 2020. (40 marks) (Total of 60 marks)