SEU XYZ Company Income Statement for 2019 Financial Year Questions

Question Description

Q1– Provide an example of each title here and then record the journal entries (2 Marks).

Following is the first given answer.

1-Purchasing Equipment for cash

Given answer:

ABC company purchased equipment for SAR20,000 cash .

Equipment20,000

Cash20,000

2-Issuing common stocks receiving cash.

3-Providing service receiving cash.

4-Purchasingsupplies on credit.

5-Borrowing money from a bank.

6-Paying employees their salaries.

Q2– What is the accrual basis of accounting? When should revenue and expense be recognized in the accrual basis? Provide an example. (1 Mark).

Q3– On your own words, explain the purpose and the importance of the income statement, and prepare the income statement for ABC company based on the following information taken from the trial balance in 2019(2 Marks)

Consulting revenue		SAR70,000
Rental revenue		30,000
Supplies expense	5,000
Rent expense	20,000
Wages expense	30,000

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