Question
QUESTION 4 (10 marks) For each of the following transactions, state the accounting principle that has been applied or violated and provide an explanation. (a)
QUESTION 4 (10 marks)
For each of the following transactions, state the accounting principle that has been applied or violated and provide an explanation.
(a) Good Job Car Repairing Company entered into an agreement to repair a truck for a customer at an agreed price of $50,000. The repair work started on December 1, 2019, and finished on January 31, 2020. The customer paid a deposit of $10,000 on December 1, 2019. The company recorded this amount as revenue for the year ended December 31, 2019. (5 marks)
(i) Name of Principle.
(ii) Indicate whether the Principle has been APPLIED or VIOLATED.
(iii) Explanation.
(b) Samson Wong is the owner of Samson Delivery Company. Recently Samson paid interest of $4,500 on a personal loan of $75,000 that he used to begin the business. The accountant of Samson Delivery Company recorded $4,500 as the companys interest expense. (5 marks)
(i) Name of Principle.
(ii) Indicate whether the Principle has been APPLIED or VIOLATED.
(iii) Explanation.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-text-image.webp)
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Step: 3
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started