Professional Documents
Culture Documents
Materiality: under this concept, all transactions are recorded, but items that have a small
dollar value are expensed rather than included as an asset on the Balance Sheet. For example,
a box of pens that costs $13 and has a useful life of two years would be treated as a stationery
expense rather than as an asset.
P1.7
Sales
Cash sales
Credit sales
Total sales
550,000
370,000
920,000
Expenses
Total expenses (410,000 + 230,000)
640,000
Accrual profit
P1.12
Item
Asset
Liability
Shareholders
Equity
Revenue
Expense
Administrative expenses
Cash at bank
Marketing expenses
Buildings
Income taxes payable
Loans from banks
Accounts payable
Retained profits
Accounts receivable
Income tax expense
Cost of goods sold
Sales Revenue
Inventories
P1.24
Shareholders equity = Assets Liabilities
= ($2,800,000 + $340,000 + $410,000)
- ($250,000 + $600,000 + $104,000)
= $3,550,000 - $954,000
= $2,596,000