Question 1

Explain the reasons for making prepayment and accruals adjustments with reference to the relevant accounting concept. (6 marks)

Tenant signed a tenancy agreement with monthly rental of $1,500 and paid $15,000 rental for the year. Show the extract of income statement and statement of financial statement for both tenant and landlord for the rental transactions record. (12 marks)

c. Provide three reasons for charging depreciation to income statement. (6 marks) d. A car with the cost of $50,000 was acquired in the financial year 2020. Depreciation to be

provided at 20% on reducing balance method.

Calculated the yearly depreciation and closing net book value for the car for year 2020 to

year 2024. (10 marks)

At the beginning of year 2025, the car to be disposed of. Calculate the required disposal price if a minimum gain of $10,000 to be made. (4 marks) (Total