Kathleen Mary-Ann O’Brien 10011813049

Accounting and Finance I10059558-A Assignment 1

Section A
1. B

2. C

3. B

4. B

5. A

6. B

7. C

8. C

Section B

Question 1
Everyone in business must keep records. Keeping good records is very important to your
business. Good records will help you do the following:

 Monitor the progress of your business

 Prepare your financial statements
 Identify sources of your income
 Keep track of your deductible expenses
 Keep track of your basis in property
 Prepare your tax returns
 Support items reported on your tax returns

Question 2

Current assets is a balance sheet account that represents the value of all assets that can
reasonably expect to be converted into cash within one year. Examples of current assets can
include cash and cash equivalents, accounts receivable and inventory.

A fixed asset is a long-term tangible piece of property that a firm owns and uses in its operations
to generate income. Fixed assets are not expected to be consumed or converted into cash within a
year. Examples of fixed assets include land and buildings, machinery and vehicles.

1
Kathleen Mary-Ann O’Brien 10011813049
Accounting and Finance I10059558-A Assignment 1

Question 3

Long-term liabilities form part of a section of the balance sheet that lists liabilities not due within
the next 12 months for example debentures, loans, deferred tax liabilities and pension
obligations. The current portion of long-term debt is excluded to provide a more accurate view of
a company's current liquidity and the company’s ability to pay current liabilities as they become
due. Long-term liabilities are also called long-term debt or noncurrent liabilities.

Current liabilities are a company's debts or obligations that are due within one year, appearing on
the company's balance sheet for example short term debt, accounts payable, accrued liabilities
and other debts. These are bills that are due to creditors and suppliers within a short period of
time. Normally, companies withdraw or cash current assets in order to pay their current
liabilities.

Question 4

Transaction O = A - L

1600
a. Bought Merchandise = -
(1600)
8000
b. Cash sales 3500 = -
(4500)
c. Settled business account = (1800) - (1800)
d. Bought on credit = 5000 - 5000
e. License Fee (250) = (250) -
f. Merchandise for own use (850) = (850) -
150
g. Dividends by rand ( 50/R) = -
(150)

Balance 2400 = 5600 - 3200

THE END