ACCOUNTING UNIT 1 Week 3 Homework due: 23/2/2022 This homeworkassesses the following areas: accounting principles and qualitative characteristics the accounting equation Answerall questions in the spaces provided ut In each of the following select the correct alternative: Circle your selection K.McMahon owns McMahon's Consulting Services. The difference between the value of all the items owned by the business and the value of all the items owed by the business is the business’ () Cash at bank (i) Net Worth (il) Gross Profit (iv) Assets The correct accounting equation from the followingis (i) Assets-+ Owners equity = Liabilities (ii) Owners Equity = Assets + Liabilities (ii) abilities = Assets ~ Owners Equity (iv) Assets= Net Worth - Liabilities E Evans used k Allan's cleaning servicesand took advantage of thirty dayscredit terms. In this transaction Evansis a... ve snes 0fllan’s (i) Accounts Receivable (i) Partner (ii) Mortgagor (iv) Accounts Payable LMartin’s business has the following assets and liabilities: Cash at bank $20,000; Motor Vehicles $40,000; Accounts Receivables $ 10,000;Stock of materials $5,000 and Accounts Payables $3,000. The net worth (owner's equity) of Martin’sbusiness is $78,000 $62,000 $72,000 $58,000 Le1+141 = 4marks1.2 Correctly classify the following balance sheet items of Jones Joinery Services using the table below. Accounts Receivables*, Bank Overdraft, Capital, Furniture, Shares in XYZ Co, Loan from DoGy Finance repayable over five years*, Loan to A Archerrepayable within 28 days, Petty Cash, Accounts Payables CurrentAssets Non Current Assets Current Liabilities Non Current abilities ‘Owners Equity Justify your classification for the following: Accounts Receivables Loan from DoGy Finance repayable over five years. 94+2=11 marks13 Listed below are several transactions of P Green ~ Greenkeeper Services. Using the balance sheet items listed below, indicate the items affected by each transaction: Bank, Motor Vehicles, Land, Accounts Payables, Loan- K Kean, Capital Transaction Balance sheet items affected and how (increase/decrease). ‘Account| Amount | Class-_] Direction ification Green withdrew $100 cash for personaluse Boughtland for $150,000 cash Borrowed $4,000 cash from K Kean’ Bought vehicle for $18,000 oncredit fromA Able Paid A Able $5,000 to repay part of. debt Repaid K Kean $i,000 to repay part of the loan Green contributed $400 additional cash to the business 14 marks14 ‘The following reportis the balance sheet of Wiz Computer Repairs ~ proprietor | Webb Balance Sheet as at 30 June 201X $ $ $ $ Assets Liabilities Bank 26000 Accounts Payables-V Wide 3000 Accounts Receivables -M High 4000 -RThin 1500 4500 -Blow 1500 5500 Loan from— B Broad 10000 Stock of spare parts 15000 Furniture 10000 Owners Equity MotorVehicles 32000 Capital — 1 Webb ? Total Assets 88500 Total Equities ‘88500 a Calculate the capital of | Webb at 30/6/201X b Express the above financial position in the form of the accounting equation c Calculate the working capital ratio for Wiz Computer Repairs a State what your calculation reveals about the liquidity of Wiz Computer Repairs 1414142=5 marks 15 Classify each of the followingas eithera Qualitative Characteristic (QC) or Accounting Principle (AP): Relevance Entity Going Concern. Verifiability. Period ___ Reporting Period Timeliness Understandability_ Faithful Representat Entity 2 marks Total 136 marks %