Principles of Accounting

CASE STUDY
Mr. Aziz Al Balushi formed Avenue Enterprises on October 1, 2017. During the month, the following financial transactions
occurred:
2017 October
1 Aziz invested OR 100,000 in the new business.
6 Avenue Enterprise provided services to Photo shop on account for OR 20,000
8 Purchased office equipment for cash OR 30,000.
10 Services provided for cash OR 25,000
12 Paid Insurance expense for OR 5,000
16 Purchased material on account for OR 10,000
21 Paid to Al Khidmah OR 1,000 cash for utility expenses.
23 Paid OR 8,000 cash for the material purchased on November 16
24 Received OR 15, 000 in cash from Photo shop for services provided on November 6.
31 Withdrew OR 3,000 for personal use
Requirements: Now that you have reviewed the case study above, respond to the following requirements on your own.
Q1. Record each of the above transactions in general journal. Explanations maybe omitted. Use the following account
titles to journalize the transactions: (50 marks)
a. Cash
b. Accounts Payable
c. Accounts Receivable

d. Insurance Expense
e. Utility Expense
f. Capital
g. Service Fee income
h. Material
i. Withdrawals
j. Office Equipment
Q2. Prepare the end-of-month report to account for the incomes and expenses of Avenue Enterprises under Cash
basis accounting. (20 marks)
Q3. Prepare the end-of-month report to account for the incomes and expenses of Avenue Enterprises under Accrual
basis accounting. (20 marks)
Q4. What are the main differences between cash and accrual accounting? The student may identify and discuss giving
example for both cash basis and accrual basis of accounting. (6 marks)