Question

Dear tutor, please answer all the question below.

Maisara invested RM90,000 cash to start her business, Maisarah Collections, in December 2019. She bought equipment for the business use valued RM32,000 on loan and supplies costing RM5,000 cash. During the month, December, she paid RM8,000 cash for salary expense, RM3,000 cash for rental expense, RM1,000 cash for utilities expense. During the month also, cash sales is RM25,000, while her credit sales amounted to RM5,000 where bills has been issued to the credit customers and no payment is received as yet. a) Maisara should consider the generally accepted accounting principles in recording her business transactions above. Identify FOUR (4) generally accepted accounting principles and explain relating to Maisara Collections business situations above. (2 marks) b) Using T-accounts to arrive to accounts balance, show trial balance for Maisara Collections for the December 2019 business transactions. (5 marks) c) Describe which attitude should Maisara has as business owner in ensuring good financial management and going concern of her business. (3 marks)

Answer 1

i) Principle of Regularity The accountant should adhere to GAAP rules and regulations as a standard for accounting purpose Maisara should regularly apply GAAP in accounting of transactions ii) Principle of Consistency The accounting should be done on consistent basis. For example: If cash basis of accounting is followed for one period it should be followed for all period Maisara should follow one system of accounting either Cash or accrual basis iii) Principle of Sincerity The business transactions should be presented in an accurate and impartial way which gives the firm's financial position Maisara should ensure business transactions are reflected in books on true and fair basis iv) Principle of Periodicity The Financial statement should be drawn up for a particular period For example: Monthly, Quarterly, Annual, etc Maisara should draw up financial statement on monthly basis Currency is RM Currency is RM Capital b) Capital Account Sales Cash 90,000 5,000 8,000 Cash 90,000 Supplies 25,000 Salary expense Rent expense Utilities expense 98,000 3,000 1,000 End Bal End Bal 90,000 Equipment 32,000 Loan Equipment Loan 32,000 End Bal 32,000 End Bal 32,000 Supplies 5,000 Salary Expense 8,000 Cash Cash End Bal 5,000 End Bal 8,000 Rent Expense Utilities Expense 1,000 Beg. Bal 3,000 Cash End Bal 3,000 End Bal 1,000 Sales Cash Accounts Receivable Accounts Receivable 5,000 Sales 25,000 5,000 End Bal 30,000 End Bal 5,000 Trial Balance Cash Accounts Receivable Supplies Equipment Bank Loan Maisara Capital balance Sales Salary expense Rent Expense Utilities Expense Totals Currency is RM Debit Credit 98,000 5,000 5,000 32,000 32,000 90,000 30,000 8,000 3,000 1,000 152,000 152,000 c) Maisara should have good entrepreneurship skills and be passionate about business She should ensure business is commercially viable so that it generates profit based on sales and expenses Maisara should regularly review the business results and take actions based on the outcome