FAC1502 Assignment 1 Semester 2 2020 Suggested solutions

FAC1502
Financial Accounting Concepts, Principles and
Procedures
Assignment 01 for Semester 02 (compulsory)
MARKS COUNT 50% TOWARDS YOUR YEAR MARK.
Unique Number 743471
1. When a service is rendered on credit, the effect will be the following:

(1) Income from services rendered account will decrease and the debtors account will
increase.
(2) Income from services rendered account will increase and the debtors account will
increase.
(3) Income from services rendered account will increase and the creditors account will
increase.
(4) Income from services rendered account will increase and the creditors account will
decrease.
(5) Income from services rendered account will decrease and the debtors account will
decrease.

Answer:

The company rendered services on account. The services have been rendered, hence,
already earned. Thus, the total amount worth of services rendered is considered income
even if the amount has not yet been collected. Since the amount is still to be collected, it is
recorded as Accounts Receivable, an asset account.

Example:




Debit
The customer owes you money for the services until they are paid for. The business now has
an asset (trade accounts receivable or trade debtor) for the amount due.