2020 JYSS 3E POA EOY P2 Q7

7 Figo’s financial year ends on 30 September.

No record had been made in the accounts during the year ended 30 September 2020 for the following 

1. Figo had taken goods, costing $1 800, on 3 March for personal use.

2. 13 April, Figo brought into the business his own motor vehicle, valued at $9 000.

3. Figo decided to split the telephone expenses of $880, one-quarter private use and three-quarters business use.


a. Explain the term drawings.


b. State what effect drawings has on the profit of a business.


c. Write the journal entries to record transactions 1, 2 and 3 above.


d. Prepare the drawings account for the year ended 30 September 2020.


e. What accounting theory is being applied for transaction 3 above.


[TOTAL 13]

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Assets or resources taken from business by owner for personal use.


No effect