s/2630/assignments/ 13326:module_item_ Page 6 Question 4 For each of the following unrelated cases, identify the application of relevant Accounting Concept and explain your answer: (a) Gonzalo runs a football school called 'GSA'. He purchased 3 footballs worth $60 for his Business and a football worth $20 as a gift for his younger brother. Which one of the two purchases should be recorded in the books of GSA and why? (5 marks) (b) Furniture (S) Pte Lid, a furniture Company sold a Sofa Set for $5,500 to a Customer on 29 December 2021. By mistake, the item was recorded as sold in January 2022. Furniture (S) Pte Lid closes its accounts on 31 December every year. How are the Sales figures for the years 2021 and 2022 affected by the wrong recording? (5 marks) (c) Max had bought a second-hand plasma TV for $300 from GG Electronics Pte Ltd for his DVD screening business. His friend offered to buy it from him for $350. At what value should the TV be recorded in the books of Max? Explain why the other value is not used. (5 marks) (d) The accounts executive of 'Step Watches' forgot to record a sale of a watch $200 made in December 2021. The total sales of the business for the year 2021 amount to $10 million. Is the omission to record $200 sale a material error? Explain your answer with relevant accounting concept, (5 marks) (e) India Tech Pte Lid bought a new Motor Vehicle costing $200,000. Supposing that there are two ways of charging the cost of using the Vehicle to the business: Charge over 4 years; the cost charged per year is $50,000. Charge over 5 years; the cost charged per year is $40,000. According to the Prudence Concept, over how many years should the cost of the Motor Vehicle be charged? Explain your answer. (5 marks) [Total: 25 marks] End of Paper