Question

ASSIGNMENT 01 (continued) Middy Garden Services provides you provides you with the following information at 2 mation at 28 February 203 Machinery Bank Vehicles ASSIGNMENT On 29 for the trans - 60 000 250 000 100 000 Course, a client of Middy Garden Services, Owes R30 000 to Garden Services for garden services rendered in January 200 Middy Garden Services owes Clean It Machines R5 000 What is the net asset value (equity) of Middy Garden Services as at 28 February 20 30 Dale Golf Course, a client 0 000 to Micro R (1) 445 000 (2) 450 000 (3) 440 000 (4) 435 000 (5) 405 000 3. Which of the following statements are correct? (a) When income earned by an entity is more than its expenditure, the entity makes a profit. (b) When the income earned by an entity is less than its expenditure, the entity makes a profit. (c) The profit that an entity makes, increases the net worth of the owner. (d) The loss that an entity makes, decreases the net worth of the owner. (e) The statement of financial position measures the financial performance of an entity Use per (1) a,b,c,d and e. (2) a,b,c and e. (3) a,c,d,and e. (4) a,b,c and d. (5) a.c,and d. Gizmo Traders bought a new electricity generator, to be used during load shedding, from Luna Lights for R50 000 and paid for it through an electronic funds transfer (EFT). What effect will the above transaction have on the accounting equation if Gizmo Traders has a favourable bank balance? Equity +R50 000 Liabilities Assets +R50 000 +R50 000 +R50 000 +R100 000 +R50 000 +R50 000 -R50 000 R50 000

Please help me with this question

Answer 1

Question 2

Machinery, Bank and Vehicles are the assets. Also the amount receivable from Dale Golf Course for the services rendered is an asset.

The amount due to Clean It Machines is a liability.

Net assets value (equity) = assets - liability

Net assets value (equity) = 60,000+250,000+100,000+30,000-5,000

Net assets value = R435,000

Correct answer: (4) R435,000

Question 3

The statement a, c and d are correct.

If the income exceeds expenditures, then there will be profit.

Therefore, the statement a is true and statement b is false.

The profit will increase the net worth of the owner and if there is loss, it will decrease the net worth of the owner because the profit or loss is added to the worth of the owner.

Therefore, the statement c and statement d is correct.

The statement of financial position provide the details of net assets of the company.

The financial performance of the company is measured by the statement of profit and loss

Therefore, the statement e is incorrect.

Correct answer: (5) a,c and d

Question 4

Machinery is purchased and payment is made using electronic mode. Bank balance is favourable which means an asset.

Therefore, there is an increase in asset by R50,000 as machinery is purchased and it is an asset. There is a decrease in bank balance as the amount is paid so the asset is reduced by R50,000.

Correct answer: (2) 0 in equity, plus and minus in asset of R50,000 and 0 in liabilities.