5.3. Limited companies
A subsection of Accounting, 7707, through 5. Preparation of financial statements
Listing 10 of 37 questions
Dev owns a business selling furniture. The following transactions took place during August 2020. Transaction Date Details $ August 9 Sold goods on credit to Petra Petra returned damaged goods to Dev Banked cash sales Petra settled her outstanding balance at 1 August by credit transfer after taking a cash discount of 5% On 1 August 2020, the balance on credit customer Petra’s sales ledger account was $940 debit. REQUIRED Complete the table to name each business document and book of prime entry for the following transactions in Dev’s accounting records. Transaction Business document Book of prime entry Prepare the account of Petra for August 2020 as it would appear in Dev’s sales ledger. Balance the account and bring down the balance on 1 September 2020. Dev Petra account Date Details $ Date Details $ Identify the section of Dev’s statement of financial position at 31 August 2020 in which the balance on Petra’s account would appear. Dev allows his credit customers a cash discount of 5% for prompt payment. He is considering reducing this to 2%. REQUIRED State one advantage and one disadvantage to Dev of this proposal. Dev is considering turning his business into a limited company. REQUIRED Advise Dev whether or not he should form a limited company. Justify your answer with two advantages and two disadvantages of forming a limited company.
7707_w20_qp_22
THEORY
2020
Paper 2, Variant 2
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Questions Discovered
37