Question 1
According to which of the following accounting concepts, even the proprietor of a business is treated as creditor to the extent of his capital? Also, explain the concept with an example.
i) Money Measurement Concept
ii) Dual Aspect Concept
iii) Cost Concept
iv) Business Entity Concept
Question 2
Times of Oman reported the financial result of Belgium Aluminium Company, Muscat.
Times of Oman
Muscat: Belgium Aluminium Company (BAC) has reported a growth in net profit and revenue for the quarter ending March, even as profit and revenue for the financial year 2014-2015 slipped. The company has predicted a growth of 35-40% in net profit and 30-35% in sales for the next financial year.
BAC has posted a 28.3% drop in net profit for the financial year 2014-2015 to OMR 32.6 million, while revenue dipped 5% to OMR 200.2 million during the same period. The company also registered a marginal increase in its net profit for the quarter ended March at OMR 11.4 million, as against OMR 10.2 million during the same period last year. Revenue for the quarter also rose by 8.6% to OMR 59.8 million. The company has recommended a dividend of 45%.
i. Discuss the reasons for BAC to predict a growth in Net Profit and Sales Revenue for the financial year 2015-16.
ii. Also identify the individuals or groups who are likely to be interested in the above given news report and explain why they may be interested.
Question 3
After four months of operations, Disney Video Company had the following account balances. Cash OMR 7,000.
Account Receivable OMR 1,000.
Office Supplies OMR 500,
Video Cassettes OMR 42,000,
Account Payable OMR 9,000
Share Capital OMR 41.500.
The following transactions took place in May, 2016:
| 3-May |
Purchased video cassettes for cash |
5000 |
| 4-May |
Received cassette hire charges |
15000 |
| 6-May |
Paid shop rent |
1000 |
| 10-May |
Paid assistant's salary |
800 |
| 11-May |
Collected from customers billed previously |
400 |
| 14-May |
Purchased office supplies for cash |
200 |
| 15-May |
Purchased video cassettes on credit |
2000 |
| 20-May |
Made part payment of purchases on May 15 |
1000 |
| 22-May |
Paid telephone charges |
300 |
| 25-May |
Paid payables due at the beginning of the month |
|
| 30-May |
Declared and paid dividends |
4000 |
i. Use Accounting Equation to show the effect of the above transactions on its assets, liabilities and capital.
ii. Analyse the effects of the transactions on the accounting equation.
Question 4
Record the following details of Black and White Limited and extract a trial balance as at 30 April 2016.
Black and White Limited commenced business on 1st April 2016 with a capital in bank of OMR 4.000. His transactions during April were as follows-
| 3-May |
Purchased video cassettes for cash |
5000 |
| 4-May |
Received cassette hire charges |
15000 |
| 6-May |
Paid shop rent |
1000 |
| 10-May |
Paid assistant's salary |
800 |
| 11-May |
Collected from customers billed previously |
400 |
| 14-May |
Purchased office supplies for cash |
200 |
| 15-May |
Purchased video cassettes on credit |
2000 |
| 20-May |
Made part payment of purchases on May 15 |
1000 |
| 22-May |
Paid telephone charges |
300 |
| 25-May |
Paid payables due at the beginning of the month |
|
| 30-May |
Declared and paid dividends |
4000 |
i. Pass Journal entries for the above transactions of Black and White ltd.
ii. Post them to the appropriate Ledger Accounts
iii. Prepare Trial balance from the ledger balances