Case 1-1 Ribbons an Bows, Inc Income and Expenditure Statement Income Expenditure Salary Rent Office Supply

Dep. on Computer Dep. on Sewing Machine Raw Material Interest of 6% (4 months) Profit 7720

1600 1800 80 250 60 2100 200 6090 1630

Balance Sheet Balance Sheet as on June 30th 2011 Assets Cash Inventory Office Supply Prepaid Rent Advertisement Computer Cash Register deposit Receivables Profit Liability 3390 Equity 4100 Loan 20 Current Liabilities 1200 Interest 150 Salary 1750 1740 320 250 12920

Answers 1 Company was profitable having profit of $ 1630 Cash decline was due to Purchase of Sewing machine,Computer,Inventory increase & Debtors 2 We can report the Financial conditions under following classification Operating Information :- All the information aboput business operation which payment is to be made when, expenses and their nature,cash flow and cash balance.

Business is in profit of 1630 $ and closing Cash has been reduced mainly because of Purchase of Assets

3 First three months are profitable as per information available but in reality the Divident or Salary for s hence it is not complete picture of the scenario. Incase Cameron decide to make payment to herself @ 1300 $ PM which will make business in Loss.

Case 1-2

Fuller needs to start Business is as follows :Proper keeping and recording of each and every Transaction. Availability and cost of Raw Material. Selling Expenses and Sale Price in monetary Terms. Local Tax rates their payment and its due date.

Non Accounting Information Market place for Raw material and Finished Product. Inventory Management. Debtors & Creditors Ageing. Working Capital Management.

Balance sheet of Kim Fuller Assets Current Assets Cash Misc. Assets N. Current Assets Warehouse

Company's Opening Owners Equity is 75000 $

Kim Fuller needs following information for construction of Profit and Loss Cost of Purchase of Raw Material. Cost of Selling Expenses. Sale Price and Sales Relisation. Value of Closing Stock. Kim Fuller should analyse his P/L quarterly.

Each and every transaction has to be recorded carefully. Assets :Any Purchase or Sale of Assets. Depreciation and its appropriate treatment. Liabilities Any increase or decrease in Libility. Liability to be classified into Cl and NCL. Due interest on loan and divident on equity to be considered.

Owners Claims. Drawings to de treated acordingly. Interest if applicable will be treated accordingly.

Dep. on Computer Dep. on Sewing Mach. Interest

(2000/24)*3=250 (1800/60)*2=60 (10,000*0.06)*4/12

h 2011 Liability 2630 10,000 200 90

12920

er,Inventory increase & Debtors

operation which payment is to be made

ed mainly because of Purchase of Assets

but in reality the Divident or Salary for self was not considered PM which will make business

each and every Transaction.

monetary Terms. d its due date.

d Finished Product.

heet of Kim Fuller Liabilities Current Liabilities Bank Loan N. Current Liab. Own. Equity Personal Loan

y's Opening Owners Equity is 75000 $

mation for construction of Profit and Loss Account.

o be recorded carefully.

on equity to be considered.

ed accordingly.