Question

QUESTION ONE The following is the trial balance of . Higer on 30 September 2019. 5500 2675 8345 41567 25467 945 2454 450 Freehold land and buildings Plant and machinery Inventory, 31 march 2019 Sales Purchases Carriage Wages Bad debts Provision for bad debts Receivables Payables Discounts Furniture Capital - 1. Higer General expenses Bank Rates Drawings - J. Higer 1350 10891 4908 1476 1647 384 19972 2676 3749 375 3715 69273 69273 The inventory at 30 September 2019 was K8840. Depreciation on plant and machinery to be provided for at the rate of 10% p.a. Provide 5 per cent on Debtors for further Bad and doubtful debts. The value of unexpired insurance is K126. The rates for the year are K1000, the trial balance figure being the actual cash paid. Prepare the Trading and Profit and Loss Account (in "T" format) for the six months to 30 September 2019, and a Statement of financial position as at that date.

B)  According to the conceptual framework of Accounting; the attributes that make the information provided in the financial statements useful to the user are referred to as 'qualitative characteristics'. There are four of them. Briefly define each one of them and use bullet points to expand on them. (Essays are not required) (25 marks)

Answer 1

Four of the qualitative characteristics of financial statements are-

1. Comparability - This advocates that Financial statements must be framed in such a way that they are comparable with the financial statements of same organization in different years or different organisations within different years

2.Understandability - Financial statements should be understandable by general public and should not much complex .It must be formed in the easiest possible way.

3.Reliability - Financial statements should be completely reliable and not be framed with any kind of misinformations.

4. Relevance - Only things which are of relevance, Should be included in Financial statements.It must not be a combination of irrelevant information.