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]
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 |
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 |
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 |