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July 07, 2020, 03:55:32 am

Author Topic: Accounting 3/4 Cambridge Question Please Help!  (Read 253 times)  Share 

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willdfdfg

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Accounting 3/4 Cambridge Question Please Help!
« on: January 17, 2020, 07:42:49 pm »
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Context for the Question:

Sybil Hilesio is the owner of Soap and Suds and as at 1 July 2025 had $30 000 of capital in her business. Sybil
let her accountant know of two transactions that had taken place during July 2025:
July 2 Took office furniture home for personal use $100 (Memo 24)
10 Contributed to the store new shelving which she had purchased 2 years ago for $4 400 including
GST (Inv. A100) but would cost $2 750 including GST if purchased today (Memo 25)

So the question says:

Explain the effect on the Accounting equation of Soap and Suds as at 31 July 2015 if Memo 25 is not
recorded.

Now I'm not sure if the Accounting equation would be balanced with both Assets and Owner's Equity increasing by 4.4k or if it doesn't balance because the actual value of the assets is 2.75k.

Please Help!!

morlin01

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Re: Accounting 3/4 Cambridge Question Please Help!
« Reply #1 on: January 19, 2020, 05:03:15 pm »
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Hello,

In the instance:

Assets will be understated by $2500 as the shelving is a non-current asset worth $2500 (we use the fair value for relevance)

Liabilities will have no effect

Owner's Equity will be also understated as since we are contributing shelving worth $2500, our capital should increase by $2500.

Im pretty sure I have completed this question correctly, however, I'm only a year 12 completing the subject this year so I don't consider myself an expert
2019 : Business Management [46]

2020: English, Further Mathematics, Accounting, Italian, Religion and Society

cotangent

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Re: Accounting 3/4 Cambridge Question Please Help!
« Reply #2 on: January 19, 2020, 11:50:53 pm »
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Hello,

In the instance:

Assets will be understated by $2500 as the shelving is a non-current asset worth $2500 (we use the fair value for relevance)

Liabilities will have no effect

Owner's Equity will be also understated as since we are contributing shelving worth $2500, our capital should increase by $2500.

Im pretty sure I have completed this question correctly, however, I'm only a year 12 completing the subject this year so I don't consider myself an expert

Yea i think ur right
2019: Accounting [45]
2020: Methods [?] Specialist [?] Physics [?] Chemistry [?] English [?]