Accounting Fundamentals: Income Statement, Balance Sheet, and Ratio Analysis

ACCOUNTING FUNDAMENTALS

Table of Contents
INTRODUCTION...........................................................................................................................................3
MAIN BODY..................................................................................................................................................3
Question 1.........................................................................................................................................3
Question 2:........................................................................................................................................6
CONCLUSION.............................................................................................................................................10
REFERENCES..............................................................................................................................................11

INTRODUCTION
Accounting can be defined as a process of recording financial transactions in a manner which
can contribute in preparation of financial statements. The report is based on two separate tasks in
which first task consists information about preparation of income statement and balance sheet.
While task two is based on analysis of given company's performance by help of ratio analysis.
MAIN BODY
Question 1
(a) Income statement and balance sheet:
Preparation of financial statement of Eccles plc
Income statement
For the year ended on 31st December 2018
Particulars Amount(£)
Sales 826,650.00
Add: Goods sold on 31st 980.00 827,630.00
Cost of goods sold -578,650.00
Gross Profit 248,980.00
Less: Expenses

Administrative expenses 30,000.00
Directors Remuneration 5,000.00
Distribution cost 28,000.00
Add: commission not recorded 3,000.00 66,000.00
Operating Profit 182,980.00
Interest paid 2,000.00
Net income before tax 180,980.00
Less: Tax 68,000.00
Net income 112,980.00
Balance sheet
Statement of Financial Position
as on 31st December, 2018
Particulars Amount(£)
Non-Current Assets
Plant & Equipment 632,730.00
Current Assets
Stock 330,600.00
Debtors 170,125.00
Add: goods sold at 31st 980.00
Cash and bank 12,900.00 514605.00