Assets and Liabilities
Sarah`s cleaning business purchased a floor polishing machine and paid $5,000 cash on the 1 June 2016.
Is the above item an asset under the “framework” definition ? Should the above item be included in Sarah` s business balance sheet on the 30th June 2016?
On the 15th May 2015, Shmal Ltd, borrowed $20,000 from the BIG BANK. The loan contract was signed on the 10th of May and the money was transferred to Shmal Ltd bank account on the 15th of May. Using the FRAMEWORK definitions, explain how Shmal Ltd should record this in her business balance sheet. (the loan is to be repaid in the year 2015).
Using the Framework definition explain why the following are assets.
(i) purchase of Inventory for $2,350 cash on the 1st May 2016 (Bookshop) (ii) Sale of Inventory on credit $3,500 to Accounts Receivable- Murdoch College
on 1st June 2016. (iii) Stationery purchased for cash $2 100 on the 1st June 2016.
Using the Framework definition explain why the following are liabilities.
(i) Accounts Payable – Publishers Ltd $5,500. The transaction giving rise to this was on the 15th June 2016. The business purchased $5,500 worth of Inventory on credit.
(ii) Electricity -Payable $550. The business used $550 worth of Electricity for April,May & June. The bill will be paid in August. It is now the 30th June 2016.
How is Equity defined using the “Framework”?
INCOME AND EXPENSES
Dawson’s cleaning business had $1,000 worth of cleaning supplies on the 1st of June. On the 30th June 2016, there was only $300 worth of cleaning supplies on hand.
· (a) Is this decrease in supplies of $700 an expense? Explain using the framework definition of an expense.
· (b) Would your answer be different if the cleaning supplies were taken for personal use by the owner?
Letieri’s Plumbing did a job for a client on the 15th June 2016 and charged the client $500. The client paid their account...