Recording Business Transactions Assessment 2 (Weighting 60%)
Recording Business Transactions
Assessment 2 (Weighting 60%)
Learning outcomes assessed:
LO1. Knowledge and understanding of double entry bookkeeping
LO2. Knowledge and understanding of books of prime entry
LO3. Knowledge and understanding of the accounting equation and financial statements
LO4. Demonstrate ability to record and summarise accounting information
LO5. Demonstrate ability to maintain accurate books of accounts for a business
LO6. Demonstrate ability to make business decisions using financial information
Errol Anderson is going to set up a business repairing and servicing cars. However, he’s uncertain whether to choose a sole trader business or a partnership, also, he does not know about the steps for starting a business. He wants you to consult him on the following matters.
Explain the advantages and disadvantages of each type in detail and (15 Marks)
Provide 5 steps for starting a new business. (15 Marks)
(Total 30 marks)
Kavan is a trader dealing in electronic goods who commenced his business in 2018. For the following transactions that took place in the month of March 2021, pass journal entries.
01/03 – Purchased goods from Y and Co. on credit
02/03 – Sold goods to D and Co. on credit
03/03 – Paid Y and Co. through a bank in full settlement
04/03 – D and Co. accepted a bill drawn by Kavan
05/03 – Sold goods to L on credit
06/03 – Sold goods to M on credit
07/03 – Received a cheque from M in full settlement and deposited the same to the
08/03 – Goods returned to Y and Co.
09/03 – L became insolvent and only 90p per pound is received by cash in the final settlement
10/03 – Goods returned by M
You are required to show the Journal entries (only) (with narrative) necessary to record the following items which occur in March 2021.
The following are the balances on the accounts of ABC on 31 August 2021:
Plant and Machinery at cost
Motor Van at cost
Rent and rates
a) Prepare ABC’s trial balance as of 31 August 2021.
(20 marks )
b) Explain the benefits and limitations of the trial balance in a business
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