Overview
- Students are advised to make their work clear and well presented, marks may be reduced for poor presentation. This includes filling your information on the cover page.
- Students must mention question number clearly in their answer.
- Avoid plagiarism, the work should be in your own words, copying from students or other resources without proper referencing will result in ZERO marks. No exceptions.
- All answers must be typed using Times New Roman (size 12, double-spaced) font. No pictures containing text will be accepted and will be considered plagiarism.
Assignment Question(s): (Marks 15)
Question 1: (5 Marks)
Abdulaziz is the owner of a service company that provides consulting services and charges the clients for them. He uses a journal to record his business transactions. Below are some of the transactions that occurred in July 2024. For each transaction, apply the rules of double-entry accounting by preparing the journal entry in SAR currency and explain the effect on the accounting equation.
- On July 1, Abdulaziz invested SAR 50,000 cash in his business to start operations.
- On July 6, the company bought office equipment worth SAR 15,000 on credit from a supplier.
- On July 10, the company received SAR 5,000 cash in advance from customer for providing consulting services next month.
- On July 16, the company paid SAR 4,000 cash for utility bills for the month.
- On July 21, the company made a cash payment of SAR. 15,000 on the equipment that purchased on account on July 6th.
- On July 28, the company performed services worth SAR 6,000 and the bill was sent to the customer.
Question 2: (5 Marks)
What is the accounting cycle? Explain every step starting from analyzing transactions to preparing post-closing trial balance. (Marks5)
Question 3: (5 Marks)
ABC Consulting is a company that provides consulting services to clients in various industries. The following are the balances taken from the trial balance:
ABC Trial Balance 31/12/2023 | ||
Account | Debit (SAR) | Credit (SAR) |
Cash | 10,000 | - |
Accounts Receivable | 15,000 | - |
Supplies | 5,000 | - |
Equipment | 50,000 | - |
Accumulated Depreciation - Equipment | - | 10,000 |
Accounts Payable | - | 8,000 |
Unearned Revenue | - | 12,000 |
Common Stock | - | 40,000 |
Dividends | 5,000 | - |
Service Revenue | - | 60,000 |
Salaries Expense | 25,000 | - |
Rent Expense | 10,000 | - |
Depreciation Expense | 5,000 | - |
Supplies Expense | 3,000 | - |
Interest Expense | 2,000 | - |
Total | 130,000 | 130,000 |
Required:
1.Prepare the income statement for the year ended 31 December 2023.
2.Prepare the statement of retained earnings for the year ended 31 December 2023.
3.Prepare the balance sheet as at 31 December 2023.