Accounting Fundamentals: Financial Statements and Ratio Analysis

FUNDAMENTALS

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
QUESTION 1 ..................................................................................................................................1
(a) Financial statement of Kedison PLC.....................................................................................1
(b) Reasons for balancing the statement of financial position....................................................3
QUESTION 2 ..................................................................................................................................4
(a)Calculate the following ratios for Chocco plc for 2020 and 2019, showing the formulas and
workings:.....................................................................................................................................4
(b) Comments on the financial performances and position of the Chocco Plc.........................11
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Fundamentals of accounting are basically a procedure of data entry along with
summarizing, recording, analysing and reporting the data which are related to the financial
transactions of business organizations (Lev, 2019). The current project is about the preparation
of financial statements within the business. According to this, all the important calculations have
been made in respect to the firm's data that are given in order to interpret the final results. The
statements will interpret the financial position and the profitability of the business. Apart from
this, the report has also describe the ratio analysis of the firm data that are given for two
particular years. The ratio analysis of the company provides data with comparing different sets
of financial data. This comparison will give a detailed understanding of the financial position of
the establishment.
MAIN BODY
QUESTION 1
(a) Financial statement of Kedison PLC
Profit and loss statement for the financial year ended 31st December 2020
Particulars Amount
Sales 826650
Less: Cost of sales 578650
Gross Profit 248000
(-) Administrative expenses 30000
(-) Interest paid (W.N. 1) 4000
(-) Directors remuneration 5000
(-) Distribution cost 28000
(-) Sales commission (W.N. 2) 3000
(-) Corporate tax 68000
Net Profit 110000
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(-) Preference dividend paid (W.N. 3) 30000
Earnings available to equity shareholders 80000
(-) Ordinary dividend paid 20000
Retained Earnings 60000
Statement of financial position as on 31st December 2020
Particulars Amount Amount
ASSETS
Fixed Assets
Plant and equipment 632730
Current Assets
Stock (W.N. 4) 329620
Debtors (W.N. 5) 171105
Cash and bank 12900
Total assets 1146355
LIABILITIES
Long term liabilities
4% Debentures 100000
Current Liabilities (W.N. 6)
Creditors 171355
Outstanding commission 3000
Outstanding Interest 2000
Tax payable 68000
Shareholders equity 802000
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