2020 NAS 3E POA EOY P1 Q2

2020 NAS 3E POA EOY P1 Q2

2 Satsuki is the sole proprietor of Totoro Trading. In the month of January 2020, the following transactions took place.

1. Satsuki contributed $500 cash for business use.

2. Obtained a loan of $70 000 from Mei Bank to purchase a delivery van.

3.  Satsuki withdrew goods costing $80 for personal use. These goods could have been sold for $145.

4. Paid workers’ salaries amounting to $6 200 via standing order.

5. Received $300 cheque for sale of an unused printer.

REQUIRED

a. Complete the table below to show the effects of the above transactions on assets, liabilities, equity and working capital. Where there is no effect, write ‘no effect’.

[6]

Part (i) has been completed as an example.

 Assets ($)Liabilities ($)Equity ($)Working Capital ($)
(i)

Cash in hand + 500

No effect

Capital + 500

+ 500
(ii)    
(iii)    
(iv)    
(v)    

b. Explain the meaning of ‘assets’.

[1]

c. Name one stakeholder who may be interested in Satsuki’s financial information and explain the reason for his interest.

[2]

[TOTAL 9]

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Assets are resources a business owns and controls ✔ that are expected to
provide future benefits. ✔

Any one of the following:

Stakeholder 

(Any one✔✔)

Reason for interest (Any one ✔✔)

Owners and shareholders

Whether to continue to invest in the business or sell the business, depending on the risks and returns related to the business

Managers

To consider ways to improve the performance of the business

Employees

Whether to continue working at the business

Lenders / Banks

Whether to grant loans to the business, depending on the business’ ability to repay the loan principal and pay interest

Suppliers

Whether to sell to the business on credit, depending on its ability to pay

Customers

Whether to buy from the business, depending on the business’ ability to provide the goods and/or services that they need and good after-sales service

Government

Whether the business complies with the tax regulations and decides the amount of tax to collect from the business

Competitors

Whether they are comparable to the business and how to improve their own performance

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