Question 1: (25 marks)
On 14 November 2023 Flying Solo Airlines (Pty) Ltd had a sale on their return tickets from Johannesburg to Cape Town. As a result, 15 return airline tickets of R1250 each were sold to passengers travelling in May 2024.
Payment for these tickets were made by the passengers on the 15 November 2023 and transferred into Flying Solo Airlines (Pty) Ltd’s bank account. Payment was reflected in the bank account on the 17 November 2023.
The financial year end of Flying Solo Airline (Pty) Ltd is 31 December 2023.
Required:
Advise Flying Solo Airline (Pty) Ltd on how the sale of the airline tickets should be classified and measured in the financial statements for the year ended 31 December 2023.
Your answer should refer to the elements of financial statements as identified in the Conceptual Framework.
Answers to Above Questions on Financial Accounting
Answer 1: The classification and measurement of the seal of airline tickets in financial statements needs to be carried out on the basis of elements as identified in the conceptual framework. In the given case scenario of Flying Solo Airlines, it is important to refer to the elements of the conceptual Framework which includes recognition, measurement and classification in order to identify the ways in which the sale of tickets can be accounted for in the financial statements of the company.
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