Question

Instruction: Answer all the questions with workings in detail. 1. Ms. Sara is appointed as the accountant of ABC LLC Muscat. She is responsible for all the accounting process of the company. The company deals with manufacturing of plastic products in Oman and distributing across GCC countries. The company has a turn over of 2.3 Million rial last year. You are required to identify the basic accounting activities that Ms. Sara must do to prepare financial statements. (1 Mark) 2. You are a business consultant in Muscat. You help your clients for setting up their business organization according to their requirements. Last week one of your client Mr. Salim requested you to advise him to start a business of manufacturing furniture. Mr. Salim is the contributing whole capital for the company RO 12500 and he would like only recruit some laborer's to work in his factory. As a consultant, what form of organization would you suggest to Mr. Salim Give reason for your answer. (1 mark) 3. Mr. Ahmed purchased a machinery from UK last year by paying RO. 12500. Due to some unforeseen events, the delivery of machines got delayed till last month. By the time the vendor increased the price of machinery from RO 12,500 to RO 15,000 due to high demand. Mr. Ahmed now asked his accountants to record RO 15000 in the books of account as the cost of the machinery. a. Do you think any of the basic accounting principles support Mr. Ahmed's decision to record the RO. 15000 as the cost of machinery? Give reason for your answer (1 mark) b. Suppose Mr. Ahmed purchased the asset by taking a loan, how it is going to affect the asst, liability and equity of the company? Give reason for your answer. (1 Mark) 4. Ms. Maatir started her own beauty salon last year. Her salon is very famous in that area and she managed to make a profit of RO 2500 every week. She uses RO 1000 every week to pay salaries to the staff and RO 500 for buying material. She also takes RO 500 for her family expenditure. She records all the expenses in her business accounts as she only manages the business. You are required to identify whether she can record all these transaction in her business account or not. Justify your answer. (1 Mark)