cash and accrual accounting

Mr. Qais started the business during the month of Feb 2020. The business named, Majestic Computers sells all kinds of

electronic items including laptop computers, printer, scanner, desktop computers etc. During the month of Feb 2020, the following financial transactions occurred:

Feb 2020 Transaction details

1 Mr. Qais invested OMR 25,000 to start the business

3 Paid rent OMR 1,000

5 Purchased office furniture for business use on credit from Fahmy Furniture worth OMR 5,000

6 Purchased electronic goods for cash worth OMR 10,000

7 Purchased office computer and software for business worth OMR 2,000 for cash

10 Purchased electronic goods on credit from Arabia Traders worth OMR 10,000

12 Sold goods for cash – OMR 3,000

15 Sold goods for credit to MM Mobile Shop worth OMR 20,000

17 Paid Fahmy Furniture OMR 5,000 for office furniture purchased on 5th Feb

18 Paid Arabia Traders OMR 5,000 for electronic goods purchased on 10th Feb

Principles of Accounting (BUSS B 1004) – Spring 20 – CW 1 (IA) – All -QP

BUSS B 1004 QP Page 2 of 7

20 Paid salaries OMR 600

22 Paid Arabia Traders OMR 4,000 for electronic goods purchased on 10th Feb

24 Withdrew drawings OMR 500

26 Received cash from MM Mobile Shop OMR 3,000 for sales mentioned on 15th Feb

28 Paid Arabia Traders OMR 1,000 for electronic goods purchased on 10th Feb

29 Paid Insurance expenses OMR 500

Discuss FIVE differences between cash and accrual accounting based on review of relevant literature. The student

may identify and discuss by giving examples for both cash basis and accrual basis of accounting from the case study provided above.