FAC 1502 ASSIGNMENT 1

Question 1 Option 3  The elements of financial statements are the general grouping of line items contained within the statements. These elements are as follows.  Assets – These are items of economic benefits that are expected to yield benefits in future periods. Examples are Trade and Other Receivables, Inventory, and Fixed assets.  Liabilities – These are legally binding obligations payable to another entity or individual. Example are Trade and Other payables.  Equity – This is the amount invested in the business by its owners, plus any retained earnings.  Income – This is an increase in assets or decrease in liabilities caused by the provision of services or products to customers. It is a qualification of the gross activity generated by a business. Examples are Product sales and Service sales.  Expenses – This is the reduction in value of an asset as it is used to generate income. Examples are Interest expense, Salaries and Wages, Depreciation etc. Question 2 Option 2 − Assets will increase as he bought property for the business. − Asset – (Bank) will not increase as he did not deposit the borrowed money into the bank account for the business. − Equity will increase as he is using the money to invest in the business in the form of buying property for the business. − Liabilities will increase as the money was used for business purposes. Question 3 Option 3 Calculations:  Assets = R (5 500 + 35 700 + 78 000 + ) = R141 700  Equity = R (78 000 + 45 500 – 23 000) = R100 500 This study source was downloaded by from CourseH on :00:01 GMT -05:00 This study resource was shared via CourseH  Liabilities = R (5 500 + 35 700) = R41 200 Question 4 Option 1 Calculations: Sales excluding vat = R (5 130 X