Situation-1

You are recently joined in Al Omani (SAOG) Company as a junior account clerk, and the accounts manager has asked you to do the following tasks.

Note: Al Omani Company is following accrual basis of accounting.

a) At what date you need to identify and record the above transaction in the books of accounts, also discuss briefly about how accrual basis of accounting system is used for recording the above transaction.

(2.5 marks Word Limit 50-80)

b) Do you think, the credit purchase transaction initially leads to increase the account payable of the business? Yes/No comment briefly on your answer. (1 marks Word Limit 20-40)

c) Identify and discuss briefly about the source document, you need to refer before identifying and recording the above credit purchase transaction in the books of accounts.

(1.5 marks Word Limit 40-70)

Following information is relevant for Questions 2 -5

Mr.Said Rashid Maqbali has worked almost ten years as an accountant in a major accounting firm based in Dubai. After gaining enough experience and knowledge from the company, he has decided to resign at the end of the year 2018 and start his own accountancy firm in his home town at Sohar.

The following are the transactions occurred in the first month of his business E&O Consultancy.

January 1. Mr.said introduced RO.45,000 as initial investment to start his new business

2. Business purchased 10 computers for RO.2,500 from Alain computers and paid cash RO.800

immediately and balance agreed to pay later

3. Business obtains a loan of RO.15,000 from a bank in Sohar

5. Business provide audit service to a listed company invoice has given for OR.1500, but the client

informed that they can pay only next month.

8. Purchase office furniture for RO.1,200 and paid cash immediately

12. Business provided accounting service to a local customer and collected cash R0.700

15. Business paid rent for the whole year in advance RO.950

18. During the month Business earned RO. 1,200 from a customer for internal audit service,

collected cash RO.700 as advance and the balance the client agreed to pay later.

20. Firm provide accounting service to a small sole proprietorship business for credit RO.800

24. Business paid salary to all office staff totaled RO.1,500

27. Paid the balance full amount to Alain computers for the purchase of computer

28. Business paid RO.700 as rent to the landlord

31. Business received RO.500 from a customer, who previously invoiced for the service for

credit.

Question 2:

You are required to analyze the above transactions and prepare a table to show the effect of all the

above transactions in the Accounting Equation. (10 Marks)

Question 3:

You are required to journalize the above transactions of E&O Consultancy for the month

January 2020, using an appropriate format.

(10 Marks)

Question 4:

You are asked to Post all the above transactions of E&O Consultancy from the journal to respective ledger accounts and find the balances at January 31, 2020.