Response to the following :
1. On April 2016, Ahmed Ali commenced trading as an ice cream salesman, selling ice creams from a van which he drove around the streets of his own town.
a. He rented the van at a cost of MVR 1,000 for three months. Running expenses for the van averaged MVR 300 per month.
b. He hired a part time helper at a cost of MVR 100 per month.
c. He borrowed MVR 2,000 from his bank, and the interest cost of the loan was MVR 25 per month.
d. His main business was to sell ice cream to customers in the street, but he also did some special catering arrangements for business customers, supplying ice creams for office parties. Sales to these customers were usually on credit.
e. For the three months to 30th June 2016, his total sales were:
i. Cash sales MVR 8,900
ii. Credit sales MVR 1,100
f. He purchased his ice cream from a local manufacturer, Sulaiman Ltd. The cost of purchase in the three months to 30th June 2016 was MVR
6,200, and 30th June he had sold every item of inventory. He still owed MVR 700 to Floor Ltd for unpaid purchases on credit.
g. He used his own home for his office work. Telephone and postage expenses for the three months to 30th June were MVR 150.
h. During the three month period he paid himself MVR 300 per month.
Required
Prepare Income Statement for three month 1st April to 30th June 2016.
2. Following information provided by Naaz Inc.
a. A computer used in the accounts department of a retail store.
b. Computer for sale in an office equipment shop.
c. Wages due to be paid to staff at the end of the week.
d. A van for sale in a motor dealer's showroom.
e. A delivery van used in a grocer's business.
f. An amount owing to a bank for a loan for the acquisition of a van, to be repaid over 9 month's period.
Required
You are required to classify the following items as non-current assets, current assets or liabilities and justify your answer.
3. Murthalo last year efficaciously complete his higher secondary education from CHSE and join his Bachelor of Business programm in Cyryx College. In his higher secondary education he studied science stream as a result he doesn't have any knowledge on accounting. He rose following question for you.
(a) What does the term debit and credit mean?
(b) What is the double entry to record a cash sales of MVR 50
(c) What is the double entry to record a purchase of chairs for MVR 1,000 for cash?
(d) What is the double entry to record a credit sale?
(e) What is the difference between the payables account in the general ledger and the purchase ledger?
Required
You are required to prepare notes for Murthalo for the above query that he have.
4. In latest years, accounting has become front-page news around the globe and has been a foremost talking point among those associated with the world of business. Regrettably, the consideration that accounting has engrossed and has been for all the erroneous reasons. We have realized that investors depend on financial reports to help and to keep an eye both on their investment and on the performance of the managers. What, though, if the managers provide deceptive financial reports to investors? Recent disclosures advocate that the managers of some hefty businesses have been doing just this. One of the most notorious cases was Enron, an energy-trading business based in Texas in USA, which was accused of entering into complicated financial arrangements in an attempt to obscure losses and to inflate profits.
Required
You are required to prepare report on Enron, reason why they have failed?