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

ACCOUNTING FUNDAMENTALS

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
Question 1....................................................................................................................................3
Question 2:...................................................................................................................................5
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Accounting can be described as a mechanism by which financial transactions are reported in a
way that can lead to the preparing of financial reports (Kranacher and Riley, 2019). The study is
based on two different activities in which details about the planning of the income statement and
balance sheet is contained in the first task. Although task two is focused on interpretation of the
findings of the given organisation by way of ratio analysis.
MAIN BODY
Question 1
(a)Income statement and balance sheet:
Income statement:
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