QUESTION THREE:

Provide your responses to each of the two independent cases below.

Case 1

Financial year of Jim Ltd ends on 30 June. Jim Ltd provided services to a customer for the amount $2,500 on the last day of June 2021 but forgot to invoice the customer for the services provided and, therefore, the information was unrecorded. The company later realized the mistake and sent invoice to the customer on 7 July 2021. The customer made the payment on 10 July. The cashier of Jim Ltd believes that no amount should be recorded on 30 June 2021 since the customer received the invoice on 7 July.

REQUIRED:

Briefly explain (by making reference to appropriate accounting concept/principle) if the cashier is correct and provide the journal entry (if required; ignore GST) that should be made on 30 June 2021.

Case 2

A companys executive with no accounting background claimed that an asset is recorded in the balance sheet only when it is owned.

REQUIRED:

Discuss how limited is the company executives understanding considering the definition of asset in accordance with the Conceptual Framework.