Accounting Fundamentals: Comprehensive Assignment Solution

This document presents a complete solution to an accounting fundamentals assignment. The solution includes detailed journal entries for various transactions, leading to the preparation of income statements and statements of financial position. The assignment covers multiple tasks, including the recording of transactions, preparation of trial balances, and the creation of financial statements. It also includes a discussion on capital expenditure versus revenue expenditure, highlighting the key differences between the two. Furthermore, the solution provides a breakdown of accounts, including accounts receivables, accounts payable, and the impact of various transactions on the financial position of a business. The document demonstrates a strong understanding of basic accounting principles and provides clear, concise solutions to each task in the assignment.

ACCOUNTING FUNDAMENTALS 1
ACCOUNTING
FUNDAMENTALS

ACCOUNTING FUNDAMENTALS 2
Task 1:
Part a:
Journal entries:
Particulars Debit Credit
Apr-05 Cash 300.00
Capital 300.00
Apr-07 Purchases 200.00
Accounts payable 200.00
Apr-08 Cash 250.00
Loan 250.00
Apr-15 Motor van 150.00
Cash 150.00

ACCOUNTING FUNDAMENTALS 3
Apr-20 Accounts receivables 350.00
Sales 350.00
Apr-28 Rent expense 50.00
Cash 50.00
Apr-29 Loan 200.00
Cash 200.00
Apr-30 Rent expense 60.00
Cash 60.00
Part b:
Particulars Debit Credit
Cash
240.0
0
Accounts receivables
350.0
0
Motor van
150.0
0
Loan
50.0
0
Accounts payable 350.0

ACCOUNTING FUNDAMENTALS 4
0
Capital
300.0
0
Drawings
60.0
0
Purchases
200.0
0
Sales
350.0
0
Rent expense
50.0
0
Total
1,050.0
0
1,050.0
0
-
Part c:
Statement of income and expense
Particulars Amount
Sales 350.00

ACCOUNTING FUNDAMENTALS 5
Less: purchases 200.00
Gross profit 150.00
Less: expenses:
Rent expense 50.00
Net profit 100.00
Statement of financial position
Particulars Amount
Assets:
Cash
240.0
0
Accounts receivables
350.0
0
Motor van
150.0
0
Total Assets
740.0
0

ACCOUNTING FUNDAMENTALS 6
Liabilities and
shareholders equity:
Loan
50.0
0
Accounts payable
350.0
0
Capital less drawings
340.0
0
Total liabilities and
shareholders equity 740
Task 2:
Part a:
Cash Purchases Motor Van Loan
Part
icula
rs
De
bit
C
r
e
di
t
Pa
rti
cul
ars
D
e
b
it Credit
Pa
rti
cul
ars
D
e
b
it
C
r
e
di
t
Pa
rti
cul
ars
D
e
b
it
C
r
e
di
t
J
a
Capi 5
,00
J
a
Ca 1
3
J
a
Ca 6
0
J
a
Ca 1
0

ACCOUNTING FUNDAMENTALS 7
n
-
0
1 tal
0.0
0
n
-
0
3 sh
0
0
n
-
0
2 sh 0
n
-
0
4 sh
0
0
J
a
n
-
0
2
Mot
or
van
6
0
0
J
a
n
-
2
7
Ca
sh
3
5
0
J
a
n
-
0
3
Purc
hase
s
1
3
0
0
J
a
n
-
0
4 Loan
10
00
J
a
n
Mot
or
expe
2
0
0

ACCOUNTING FUNDAMENTALS 8
-
1
0 nses
J
a
n
-
2
4
Stor
age
expe
nses
1
5
0
J
a
n
-
2
0
Sale
s
80
0
J
a
n
-
2
7 Loan
3
5
0
J
a
n
-
Dra
wing
s
1
7
5

ACCOUNTING FUNDAMENTALS 9
3
0
Motor
expenses Capital Drawings Sales
Part
icula
rs
De
bit
C
r
e
di
t
Pa
rti
cul
ars
D
e
b
it Credit
Pa
rti
cul
ars
D
e
b
it
C
r
e
di
t
Pa
rti
cul
ars
D
e
b
it
C
r
e
di
t
J
a
n
-
1
0 Cash
20
0
J
a
n
-
0
1
Ca
sh 5,000.00
J
a
n
-
3
0
Ca
sh
1
7
5
J
a
n
-
2
0
Ca
sh
8
0
0
Storage
expenses
Part
icula
rs
De
bit
C
r
e
di

ACCOUNTING FUNDAMENTALS 10
t
J
a
n
-
2
4 Cash
15
0
Journal entries:
Particulars Debit Credit
Jan-01 Cash 5,000.00
Capital 5,000.00
Jan-02 Motor van 600.00
Cash 600.00
Jan-03 Purchases 1,300.00
Accounts payable 1,300.00
Jan-04 Cash 1,000.00

ACCOUNTING FUNDAMENTALS 11
Loan 1,000.00
Jan-10 Motor expense 200.00
Cash 200.00
Jan-13 Accounts receivables 300.00
Sales 300.00
Jan-20 Accounts receivables 500.00
Sales 500.00
Jan-24 Storage expense 150.00
Cash 150.00
Jan-27 Loan 350.00
Cash 350.00
Jan-30 Drawings 175.00
Cash 175.00
Part b:
Particulars Debit Credit
Cash 4,025.0

ACCOUNTING FUNDAMENTALS 12
0
Motor van
600.0
0
Drawings
175.0
0
Loan
650.0
0
Capital
5,000.0
0
Purchases
1,300.0
0
Sales
800.0
0
Motor expenses
200.0
0
Storage expenses
150.0
0
Total
6,450.0
0
6,450.0
0
Part c:
Statement of income
Particulars Amount

ACCOUNTING FUNDAMENTALS 13
Sales
800.
00
Less: cost of goods
sold
500.
00
Gross profit
300.
00
Less: expenses:
Motor expenses
200.
00
Storage expenses
150.
00
Net profit
-
50.00
Statement of financial position
Particulars Amount
Assets:
Cash 4,025.0

ACCOUNTING FUNDAMENTALS 14
0
Inventory
800.0
0
Motor van
600.0
0
Total Assets
5,425.0
0
Liabilities and
shareholders equity:
Loan
650.0
0
Accounts payable
Capital less drawings
4,775.0
0
Total liabilities and
shareholders equity 5425
Task 3:
Part a:
Cash Purchases Accounts Furniture

ACCOUNTING FUNDAMENTALS 15
payable and fixtures
Parti
cular
s
De
bi
t
C
r
e
d
it
Part
icula
rs
D
e
b
it
C
r
e
d
it
Part
icul
ars
D
e
b
it
C
r
e
d
it
Parti
cular
s
D
e
b
it
C
r
e
d
it
J
a
n
-
0
1
Openi
ng
balan
ce
34
3.
00
J
a
n
-
0
5
Acc
ount
s
paya
ble
1
5
0
J
a
n
-
0
1
Ope
ning
bala
nce
3
3
J
a
n
-
0
1
Openi
ng
balan
ce
1
9
8
J
a
n
-
0
1
J
a
n
-
0
7
Acco
unts
receiv
ables 18
J
a
n
-
1
4 Cash
7
5
J
a
n
-
0
7
Cas
h
1
8
J
a
n
-
0
9
Acco
unts
payab
le
2
1
J
a
n
-
0
9
Cas
h
2
1

ACCOUNTING FUNDAMENTALS 16
J
a
n
-
0
9 Sales 64
J
a
n
-
1
5
Cas
h
1
2
J
a
n
-
1
4
Wage
s
1
4
J
a
n
-
1
4
Purch
ases
7
5
J
a
n
-
1
5
Acco
unts
payab
le
1
2
J Offic 3

ACCOUNTING FUNDAMENTALS 17
a
n
-
2
0
e
desk 2
J
a
n
-
2
1
Wage
s
1
7
J
a
n
-
2
1 Sales
11
0
J
a
n
-
2
3
Offic
e
expen
ses 3
J
a
Acco
unts
25

ACCOUNTING FUNDAMENTALS 18
n
-
2
8
receiv
ables
J
a
n
-
2
8 Sales 84
J
a
n
-
3
1 Sales 30
J
a
n
-
2
8
Wage
s 15
Office desk
Office
expenses Drawings Sales

ACCOUNTING FUNDAMENTALS 19
Parti
cular
s
De
bi
t
C
r
e
d
it
Part
icula
rs
D
e
b
it
C
r
e
d
it
Part
icul
ars
D
e
b
it
C
r
e
d
it
Parti
cular
s
D
e
b
it
C
r
e
d
it
J
a
n
-
2
0 Cash 32
J
a
n
-
2
3 Cash 3
J
a
n
-
0
2
Acco
unts
receiv
ables
1
2
4
J
a
n
-
1
1
Acco
unts
receiv
ables
6
4
J
a
n
-
2
4 Cash
1
1
0
J Cash 8

ACCOUNTING FUNDAMENTALS 20
a
n
-
2
8 4
Wages
expense
Accounts
receivables
J
a
n
-
3
1 Cash
3
0
Parti
cular
s
De
bi
t
C
r
e
d
it
Part
icula
rs
D
e
b
it
C
r
e
d
it
J
a
n
-
0
5 Cash 12
J
a
n
-
0
1
Ope
ning
bala
nce
8
3
J
a
n
Cash 14 J
a
n
Sale
s
1
2
4

ACCOUNTING FUNDAMENTALS 21
-
1
4
-
0
2
J
a
n
-
2
1 Cash 17
J
a
n
-
2
3 Cash
2
5
J
a
n
-
2
8 Cash 15
Journal entries:
Particulars Debit Credit
Jan-
02 Accounts receivables 124.00
Sales 124.00
Jan- Wages 12

ACCOUNTING FUNDAMENTALS 22
05
Cash 12.00
Jan-
07 Purchases 150
Accounts payable 150.00
Jan-
09 Accounts payable 21.00
Cash 21.00
Jan-
11 Cash 64.00
Sales 64.00
Jan-
14 Wages 14.00
Cash 14.00
Jan-
15 Purchases 75.00
Accounts payable 75.00
Jan-
15 Accounts payable 12.00
Cash 12.00

ACCOUNTING FUNDAMENTALS 23
Jan-
20 Office desk 32.00
Cash 32.00
Jan-
21 Cash 110.00
Sales 110.00
Jan-
21 Wages 17.00
Cash 17
Jan-
23 Office expenses 3
Cash 3
Jan-
23 Cash 25
Accounts receivables 25
Jan-
28 Cash 84
Sales 84

ACCOUNTING FUNDAMENTALS 24
Jan-
28 Wages 15
Cash 15
Jan-
31 Cash 30
Sales 30
Part b:
Particulars Debit Credit
Cash in hand
473.0
0
Inventory
458.0
0
Furniture and fixtures
198.0
0
Receivables
164.0
0
Office desk
32.0
0
Accounts payable
150.0
0

ACCOUNTING FUNDAMENTALS 25
Capital
1,049.0
0
Sales
412.0
0
Purchases
225.0
0
Wages expenses
58.0
0
Office expenses
3.0
0
Total
1,611.0
0
1,611.0
0
Part c:
Statement of income
Particulars Amount
Sales 412.00
Less: cost of goods sold 309.00

ACCOUNTING FUNDAMENTALS 26
Gross profit 103.00
Less: expenses:
Wages expenses 58.00
Office expenses 3.00
Net profit 42.00
Statement of financial position
Particulars Amount
Assets:
Cash
473.0
0
Inventory
374.0
0
Furniture and fixtures
198.0
0
Receivables
164.0
0
Office desk
32.0
0

ACCOUNTING FUNDAMENTALS 27
Total Assets
1,241.0
0
Liabilities and
shareholders equity:
Accounts payable
150.0
0
Capital less drawings
1,091.0
0
Total liabilities and
shareholders equity
1,241.0
0
-
Task 4:
Particulars Debit Credit
Accounts
receivables -
Accounts payable
4,850.0
0
Cash 6,505.0

ACCOUNTING FUNDAMENTALS 28
0
Sales
22,075.0
0
Purchases
20,420.0
0
Total
26,925.0
0
26,925.0
0
Claire
Particulars Debit Credit
Jun-02 Sales 8,075.00
Jun-22 Sales return 1,000.00
Jun-24 Cash 7,075.00
Total -
Jane
Particulars Debit Credit
Jun-20 Sales 6,000.00

ACCOUNTING FUNDAMENTALS 29
Total 6,000.00
Georgina
Particulars Debit Credit
Jun-13 Purchases
11,160.0
0
Jun-25 Cash
11,160.0
0
Total -
Andrew
Particular
s Debit Credit
Jun-21 Purchases
4,410.0
0
Jun-27 Cash
4,410.0
0

ACCOUNTING FUNDAMENTALS 30
Total 0
Hywel
Particulars Debit Credit
Jun-14 Sales
9,000.0
0
Jun-25 Cash
9,000.0
0
Total -
Mandy
Particulars Debit Credit
Jun-24 Purchases
4,850.0
0
Total
4,850.0
0
Task 5:
Capital expenditure is the business expense which is made for the purposes of acquiring an
asset with the aim of improving the capacity of that asset. Hence, this is the amount of money

ACCOUNTING FUNDAMENTALS 31
which is spent by the company to purchase the long term capital asset or for the purposes of
improving or increasing the capacity of the existing capital asset. This amount of an expense
is made in order to growth the business and also to increase the products earned by the
company and then, reduce the cost of production. This is the sort of spending that takes care
of the future economic benefits of the company. An example of this includes the purchase of
a new machinery that could lead to an increase in the production of the revenue for the
company (Accounting tools, 2019).
The revenue expenditure on the other hand, includes the expenses to be incurred on some
daily basis or during the day to day business operations. Hence, these are the expenses that
are incurred on some regular basis. These are incurred in the normal course of the business or
are the costs that are incurred in the normal course of the business operations and hence, are
recognised immediately. The examples include stationery expense, electricity expense etc.
these are the expenses that are charged as against the income of the current year or the current
period.
The following are the differences between the two:
1. The term of the capital expenditure is long whereas the term of revenue expenditure is
short. The revenue expense are exhausted within the year whereas, the capital expense
gives the benefits for oms future years.
2. In respect of value, the capital expenditure sees that an asset is procured or the value
of the existing asset is improved whereas in respect of the revenue expenditure, nor
the acquisition nor the value helps in the enhancement of the asset.
3. The revenue expenditure has no physical existence whereas the capital expenditure
has some physical existence since it is mainly on plant, machinery etc.
4. The capital expenditure is non-recurring in nature whereas the revenue expenditure is
recurring in nature.
5. The capital expenditure helps the company in progressing whereas the revenue
expense helps in maintaining the business.
6. With regard to capital expenditure, the same reflects in the balance sheet, on the assets
side whereas the revenue expenditure reflects in the income statement or in the
trading profit and loss account.
7. The capital expenditure is added to the cost of the asset whereas the revenue expense
is not capitalised.

ACCOUNTING FUNDAMENTALS 32
8. The revenue goes on to reduce the income earned by the company whereas the capital
expenditure does not reduce the income earned by the company.
9. The capital expenditure seeks to improve the revenue earning capacity whereas the
revenue expenditure does not.
10. The capital expenditure is matched up with the capital income whereas the revenue
expense is matched up with the revenue income (Economic discussion, 2019).

ACCOUNTING FUNDAMENTALS 33
References:
AccountingTools. (2019). The difference between capital expenditures and revenue
expenditures — AccountingTools. [online] Available at:
https://www.accountingtools.com/articles/the-difference-between-capital-expenditures-and-
revenue-expe.html [Accessed 23 Dec. 2019].
Economics Discussion. (2019). Revenue Expenditure and Capital Expenditure. [online]
Available at: http://www.economicsdiscussion.net/expenditure/revenue-expenditure-and-
capital-expenditure-of-india-notes/749 [Accessed 23 Dec. 2019].