Solution & Discussion FIN711 Advanced Financial Accounting GDB No. 01 Fall 2014 Due Date: December 08, 2014

Topic/Area for Discussion

“Single Entry System”

This Graded Discussion Board will cover Audio/Video lessons # 5.

(1) Determine using the following information the amount of interest on capital earned by Mr. Entrepreneur on his capital used his business during the year 2013: (4 Marks)

a) He brought a car having market value of Rs. 425,000 in his business house to be used for business purposes only. This car had gifted him his wife on their 3rd marriage anniversary last year. The car was purchased at a price of Rs. 460,000.

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b) He had certain assets of Rs. 1.80 million and corresponding liabilities of Rs. 0.75 million at the year’s beginning. Whereas these assets have been grown to the amount of Rs. 2.23 million and the corresponding liabilities have also been enhanced by 150%

c) During the year, his business generated an amount of Rs. 86,500 as net profit before tax excluding interest on capital amounted to Rs. 112,000 and interest of drawings amounted to Rs. 56,000.

d) Goods worth Rs. 115,500 gifted to Mr. Old – one of his friend who has started his own business.

(2) Differentiate the term “Statement of Affairs” used under single entry system from the term “Balance Sheet” used under double entry book keeping system. (2 Marks)

(3) Draw a complete hypothetical ledger account of debtors incorporating all information at their maximum. (4 Marks)