Mr. Q started his own business. As it is a very small business with little investment and very less transactions, he does not want to hire any employees to record the transactions happening in the business. As he is not from an Accounting background, he finds it very difficult to understand how to classify the transactions and record. Some transactions are given to you to help him classify transactions category under 

A) Current Assets 

B) Current Liabilities 

C) Long term liabilities 

D) Long term Assets 

E) Contingent Liability. 

You are also required to guide him how you have classified a particular transaction by giving suitable reasons in the books of both the parties.

i) Suppose Mr. A has purchased goods for using it in manufacturing from Mr. B on credit for RO 10,500.

ii) Mr. Q’s company borrowed money from Bank Muscat promising to repay it after 4 years.

iii) A Promised to deliver the goods to Mr. Z on November1 st 2020. Mr. Z paid the cash of RO. 6,800 before the goods were delivered to him.

iv) Mr. Q is working part time in ABC ltd. He did not receive the salary for the month of August.

v) Mr. A’s company sold goods to Mr. Ali on credit basis of RO 3,750 and later the same has been changed from credit into Note.

Answer rating: 100% (QA)

iIn the books of Mr A purchase of goods for using in manufacture will be treated as CURRENT ASSETS because it is raw materials which will be converted ... View the full answer