90.2K

Verified Solution

Link Copied!

d. Under the "Double Entry System" every transaction has two aspects - debit and credit of equal amounts. Explain the following example using the double entry system concept. Example: A business owner purchases a cement mixing plant on credit. The total credit purchase is OMR 50,000. This cement mixing plant will be used in daily business operations and will not be sold for the next 10 years. The estimated life of the cement mixing plant is 10 years e. Every business transaction can be analysed or expressed in terms of its effect on the balance sheet equation. Give one transaction for each of the following that will have effect on: increase in asset and an increase in liability I. Increase in one asset and a decrease in another asset ili. Decrease in asset and a decrease in proprietor's equity iv. Increase in one liability and a decrease in another liability V. Increase in asset and an increase in proprietor's equity You are required to record the transactions, identify the accounts involved in the transactions and state the nature of each account. Also mention how it increases or decreases the accounts for the transactions by applying the debit and credit rules. f. Record the financial transactions took place in a grocery store. Prepare a sales book and return inwards book to record all these transactions 1. Goods sold for cash (2 transactions) . Goods sold on credit (4 transactions) ili. Good sold with cash discount (1 transaction) iv. Sold goods returned by the purchaser for the damages (3 transactions) Conclusion (100 words)

Answer & Explanation Solved by verified expert

See Answer