Q1- Provide an example of each title here and then record the journal entries (2 Marks). Following is the first given answer. 1-Purchasing Equipment for cash Given answer: ABC company purchased equipment for SAR20,000 cash . Equipment20,000 Cash20,000 2-Issuing common stocks receiving cash. 3-Providing service receiving cash. 4-Purchasing supplies on credit. 5-Borrowing money from a bank. 6-Paying employees their salaries.
Q2- What is the accrual basis of accounting? When should revenue and expense be recognized in the accrual basis? Provide an example. (1 Mark).
Q3- On your own words, explain the purpose and the importance of the income statement, and prepare the income statement for ABC company based on the following information taken from the trial balance in 2019(2 Marks) Consulting revenue SAR70,000 Rental revenue 30,000 Supplies expense 5,000 Rent expense 20,000 Wages expense 30,000
