2020 JYSS 3N POA EOY P2 Q3
3 Angie is confused of some of the terms in her financial statements.
REQUIRED
a. Explain the difference between cash transaction and credit transaction.
[2]
b. Explain the term “asset”.
[2]
The following transactions took place in Angie’s business for the month of April 2020.
2020 | |
Apr 1 | Angie bought $2000 worth of goods from supplier Ben on credit. |
10 | Angie sold goods at a selling price of $800 to Mabel, a customer, for cash. The goods cost $500. |
15 | Angie returned $100 worth of goods to supplier Ben. |
18 | Angie paid supplier Ben, $1900 by cheque. |
20 | Angie bought a motor vehicle $85 000 on credit from Sunny. |
c. Prepare the journal entries to record the above transactions.
[12]
d. State the source document used to record each of the above transaction.
[5]
Transaction on | Source document |
Apr 1 |
|
10 |
|
15 |
|
18 |
|
20 |
|
State one reason why Angie would return the goods to supplier Ben on 15 April 2020.
[1]
[TOTAL 22]
Cash transaction occur when the business receives payment from customers immediately at the Point of sales whereas for credit transaction, payment from customers is delayed to a later date.
Assets are resources owned/controlled by the business that are expected to provide future benefits.
Transaction on | Source document |
Apr 1 | Invoice [1m] |
Apr 10 | Receipt [1m] |
Apr 15 | Credit note [1m] |
Apr 18 | |
Apr 20 | Invoice [1m] |
Goods are damaged or of the wrong specifications.