Course Content
Basic Accountancy (Past Paper 2009)
All questions are taken from DAO Exam Part-I (Past Paper 2009)
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Classifying daily basis transactions according to their types
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What is Statement of Financial Position (SOFP)
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Write double-Entry Formula Entries
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Recording Cash Book Transaction
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Journal Entry
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Short Questions
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Find Depreciation: The Time Value of Money
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Reconciliation of Payables and Supplier’s Memorandum Ledger Balances
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Basic Accounting-I (Past Paper 2010)
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Let's Analyze your knowledge with Quiz
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Basic Accounting (Past Paper 2010)
Division Accounts Officer's Examination (Part-I) 2010 paper answers
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Present Journal entries from the enlisted transactions
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Transactions Typically Recorded in a Journal
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Security Aspects of Handling and Storing Money
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Define Bank Reconciliation & draw it benefits
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Bank Reconciliation Example
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Bad debt
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Good internal controls to support an efficient and reliable payroll system
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Replacing Machinery
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Dismantling Costs of Old Machine
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Basic Accounting Help Material
Short definition of the Accounting terms
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Book of Accounts
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Accounting Processes
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Single-entry and Double-entry accounting:
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Financial Statements (Assets, Liabilities, and Shareholders’ Equity)
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Difference between a balance sheet, an income statement and a cash flow statement
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What is the difference between a cash book and a bank statement?
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Course outline for Basic Accounting
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New Accounting Model (Exam-2009)
Books references: 1. Account Code (Volume III). 2. Chart of Accounts (Issued by CGA). 3. Manual Accounting Principles. 4. Accounting Policies and Procedures Manual.
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Select Suitable answers
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Write short notes on the following questions.
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Pass Journal Entries
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Reconciliation of Contractors’ Expenditure in APPM
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Treatment of Replacement Cheques, Unclaimed and Stale Cheques in APPM
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Business Communication (Exam 2009)
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Proposal for the Auditor General of Pakistan
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Write an essay on the new challenges emerging for the auditors
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What type of business skills are used in contract planning, execution, implementation and evaluation?
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Please comment on the following:
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Please comment in short on the following:
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Private: DAO Part-I Examination 2024 (Fresh Candidates) Past Papers
About Lesson

Question 2.

M/S. Safe Way Co. is setting up a small retail outlet with an initial capital of Rs.400,000/- and has taken a loan of Rs.150,000/- to be invested as follows:

(a) Land and building Rs.300,000/-
(b) Shelves, furniture, fixtures and fittings Rs.60,000/-.
(c )Computers, till machine and other equipment, Rs.15000/-
(d) Delivery van Rs.15,000/-

  • The delivery van was bought on credit from a second-hand car dealer and all the other items were paid for in cash.

Write the double-entry formula entries for the above transactions. Use the abbreviation for statement of financial position SOFP (balance sheet).

1) Specify whether the assets are current or non-current in nature?
2) Specify whether the liabilities are current or non-current in nature?

Answer:

We first need to break down the transactions for M/S. Safe Way Co. and create double-entry formula entries. We’ll also specify whether the assets and liabilities are current or non-current:

Assets:

  • Land and Building: Rs.300,000 (Non-current asset)
  • Shelves, Furniture, Fixtures, and Fittings: Rs.60,000 (Non-current asset)
  • Computers, Till Machine, and Other Equipment: Rs.15,000 (Non-current asset)
  • Delivery Van: Rs.15,000 (Non-current asset)

Liabilities:

  • Loan: Rs.150,000 (Non-current liability)

Now let’s create the double-entry formula entries:

  • Land and Building (Non-current asset):

    • Debit: Land and Building (Asset) = Rs.300,000
    • Credit: Loan (Liability) = Rs.150,000
    • Credit: Capital (Equity) = Rs.150,000

  • Shelves, Furniture, Fixtures, and Fittings (Non-current asset):

    • Debit: Shelves, Furniture, Fixtures, and Fittings (Asset) = Rs.60,000
    • Credit: Capital (Equity) = Rs.60,000

  • Computers, Till Machine, and Other Equipment (Non-current asset):

    • Debit: Computers, Till Machine, and Other Equipment (Asset) = Rs.15,000
    • Credit: Capital (Equity) = Rs.15,000

  • Delivery Van (Non-current asset):

    • Debit: Delivery Van (Asset) = Rs.15,000
    • Credit: Loan (Liability) = Rs.15,000

The accounting equation (SOFP) remains balanced as shown below:

[ {Assets} = {Liabilities} + {Equity} ]

We now organize the double-entry formula entries for M/S. Safe Way Co. in a tabulated format, resembling an accounts format:

Account Debit (Rs) Credit(Rs)
Land and Building 300,000
Shelves, Furniture, Fixtures, and Fittings 60,000
Computers, Till Machine, and Other Equipment 15,000
Delivery Van 15,000
Loan (Liability) 150,000
Capital (Equity) 225,000
Total: 390,000 Total: 390,000

The accounting equation (SOFP) remains balanced:

[ {Assets} = {Liabilities} + {Equity} ]

Get to know, What is statement of financial position SOFP (balance sheet).
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