Revenue Recognition Principle: Revenue Recognition Principle states that the revenue should be recorded only when the goods or services are sold and delivered to the customer and the value of goods or service is determinable and collection of the money is not doubtful. To Indicate: The Recognition of the revenue

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QUESTION ONE As a fresh graduate from the school of business at Mulungushi University, you have just been employed by an emerging successful entrepreneur, a Mr. Kyambalesa, as his Accountant.Kyambalesa is a retail grocer involved in buying and selling of goods. You have discovered that Kyambalesa together with one of his clerical employee had just completed preparing accounts for the year ended 31 December 2022. The accounts reveal a profit of K305,000= You have just gone through the accounts and other related documents and discovered the following: 1. Mr. Kyambalesa withdrew goods from his business for domestic use valued at K10,000 purchase cost. He makes a profit of 25% on cost. Kyambalesa recorded this withdrawal in the accounts as a sale to himself at cost (K10,000). 2. You discover that there was a further withdrawal of goods for domestic use valued at K2,000 cost, which was never recorded in the accounts and therefore did not affect the profit of K305,000 in any way. 3. Mr.…

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Chapter 3, Problem 3.1C

To determine

Concept Introduction:

Revenue Recognition Principle:

Revenue Recognition Principle states that the revenue should be recorded only when the goods or services are sold and delivered to the customer and the value of goods or service is determinable and collection of the money is not doubtful.

To Indicate:

The Recognition of the revenue

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QUESTION ONE As a fresh graduate from the school of business at Mulungushi University, you have just been employed by an emerging successful entrepreneur, a Mr. Kyambalesa, as his Accountant.Kyambalesa is a retail grocer involved in buying and selling of goods. You have discovered that Kyambalesa together with one of his clerical employee had just completed preparing accounts for the year ended 31 December 2022. The accounts reveal a profit of K305,000= You have just gone through the accounts and other related documents and discovered the following: 1. Mr. Kyambalesa withdrew goods from his business for domestic use valued at K10,000 purchase cost. He makes a profit of 25% on cost. Kyambalesa recorded this withdrawal in the accounts as a sale to himself at cost (K10,000). 2. You discover that there was a further withdrawal of goods for domestic use valued at K2,000 cost, which was never recorded in the accounts and therefore did not affect the profit of K305,000 in any way. 3. Mr.…

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Ramsworth Ltd. is a wholesale business and you have recently been employed within the position of a credit-based controller within the company. You have just obtained a summary of Ramsworth Ltd’s most recent draft income statement and statement of financial position as follows: Income statement for the year ended 31 December 2020 £000 Sales Revenue 8,649 Cost of Sales (5,106) Gross Profit 3,543 Other Operating Expenses (998) Operating Profit 2,545 Interest (265) Profit before Taxation 2,280 Taxation (570) Profit for the year 1,710 Statement of Financial Position as at 31 December 2020 £000 Non-current assets at cost 6,284 Accumulated depreciation (2,943) 3,341 Current assets Inventories 2,648 Trade receivables 1,428 4,076 Total assets Equity 7,417 Ordinary share capital 2,100 Revenue reserves 2,384 4,484…