Accounting for Business

ACCOUNTING FOR
BUSINESS

Table of Contents
SECTION A.....................................................................................................................................3
(A) Income statement...............................................................................................................3
(b) Statement of financial position..............................................................................................3
SECTION B.....................................................................................................................................4
QUESTION 4..................................................................................................................................4
a) Calculation of budgeted profit, break-even sales and margin of safety of MS LTD..............4
b) Calculation of sales unit required to make a profit of £..........................................................5
c) Calculation of new profit, break-even point and margin of safety..........................................5
d) Assumption and limitation apply in above calculations..........................................................5
QUESTION 5..................................................................................................................................6
a) Calculation of Ratios for RAP LTD........................................................................................6
b) Critical discussion on the performance of RAP LTD.............................................................7
REFERENCES................................................................................................................................1

SECTION A
Income statement
£000 £000
Sales 1204
Less:
COGS
Op. Stock 44
Purchase 805
Closing stock (60) (789)
Gross profit 425
Less: Expenses
Rates and insurance 35 (40 – 5)
Telephone 5
Energy bill 29 (28 + 1)
Audit fee 10
Director remuneration 33
Salaries and wages 192 (190 + 2)
Depreciation on vehicle 12 (60 * 12%)
Depreciation on equipment 20 (100 * 20%)
Taxation 20
Interest 4 (360)
Net profit 65
(b) Statement of financial position
Particular Amount
Equipment 100
Vehicle 90
Cash 1
Bank 2
Prepared insurance 5