AFE3692 Assignment 1 Question 1 (20 marks) 1. To provide relevant and reliable information to meet the users' needs, financial statements should be subject to certain constraints should also be subject to certain constraints. Describe three (3) of these constraints. (8 marks) 2. Avia Ltd is a retail business which has a financial year end 31 December. On 30 November 2020, the accountant recorded the following journal entry and it was posted to the ledger: Debit Credit Inventory (SFP) 20 000 20 000 Marathon Ltd (SFP) The amount of N$ 20 000 represents of the purchases of merchandise Marathon Ltd, a supplier of sugar products to retail business. Required: 1. Identify the element, as per the Conceptual Framework Financial Reporting which was debited in the above journal entry. (2 mark) 2. Explain the element you have chosen in 2.1. Your explanation/motivation should only refer to the definition criteria of this element in accordance with the Conceptual Framework Financial Reporting. (4 marks) 3. Identify the element, as per the Conceptual Framework Financial Reporting, which was credited in the above journal entry. (2 marks) 4. Explain the element you have chosen in 2.3. Your explanation/motivation should only refer to the definition criteria of this element in accordance with the Conceptual Framework of Financial Reporting. (4 marks)