Ruby, opens her own law office, Ruby Associates (RA) which started the operation on 1st January 2019. RA operates in Johor Baharu, Johor, Malaysia. On 1* January 2019, Ruby introduced cash of RM155,000, an brought in her personal equipment that cost RM17,000 and motor vehicle at the cost RM45,000 for business use. During the month, RA carned revenue RM15,080 by cash from the services rendered. RA had paid the following expenses by cash: RM 5,000 3,200 1,500 Salaries Rent Stationeries Trade creditors/ Accounts payable RM3,700 was identified by end of the month. On 31* January 2019, Ruby introduced RM10,000 for additional investment. She recorded this transaction as an increase cash and increase in revenue.
Ruby, opens her own law office, Ruby Associates (RA) which started the operation on 1st January 2019. RA operates in Johor Baharu, Johor, Malaysia. On 1* January 2019, Ruby introduced cash of RM155,000, an brought in her personal equipment that cost RM17,000 and motor vehicle at the cost RM45,000 for business use. During the month, RA carned revenue RM15,080 by cash from the services rendered. RA had paid the following expenses by cash: RM 5,000 3,200 1,500 Salaries Rent Stationeries Trade creditors/ Accounts payable RM3,700 was identified by end of the month. On 31* January 2019, Ruby introduced RM10,000 for additional investment. She recorded this transaction as an increase cash and increase in revenue.
Chapter7: Deductions And Losses: Certain Business Expenses And Losses
Section: Chapter Questions
Problem 14DQ
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Question
Assume that Ruby Associates is in the process of applying financing facility from MyBank. For that purpose, MyBank requires RA to submit the company’s financial statements to be reviewed by the bank.
i. Why MyBank request the financial statements? Give TWO (2) reasons
ii. Identify and explain the relevant information from the financial statements the important for MyBank in making decision.
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