Accounting Fundamentals: Financial Statements, Ratios, and Analysis

ACCOUNTING
FUNDAMENTALS

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
QUESTION- 1.................................................................................................................................3
a) Financial statements of Kedison PLC.....................................................................................3
b) Reason for balancing of the statement of financial position...................................................6
QUESTION- 2.................................................................................................................................6
REFERENCES..............................................................................................................................17

INTRODUCTION
Accounting is the language of business and accounting fundamentals are base for
preparing income statement, cash flow statement and balance sheet. This project shall cover
income statements, balance sheet and financial ratios of the company data that are available.
Income statements will show profit and loss of the company and balance sheet will highlight
financial position (Glover, 2017). Moreover, financial ratios help in analysing company
performance in detail. Through this financial statement, company can analyse their performance,
profitability, efficient utilization of fund etc.
MAIN BODY
QUESTION- 1
a) Financial statements of Kedison PLC
Income statement for the period ended 31st December 2020
particular £’000
Revenue / sales / income 826650
(-)Cost of sales 578650
Gross profit 248000
(-)Administration expenses 30000
(-)Distribution costs 28000
(-)sales commission 3000
(-)Directors remuneration 5000
(-)Interest paid 4000
Operating profit 178000
(-)Tax paid 68000
Profit after tax 110000

(-) preference dividend 30000
Amount for equity shareholder 80000
(-)ordinary dividend 20000
Retained earnings 60000
Financial position as on 31st December 2020
particular £’000
Assets
Plant and equipment 632730
debtors 171105
Cash and bank 12900
stock 329620
Total assets 1146355
Liabilities
long term liabilities
4% debenture 100000
Current liabilities
Trade creditors 171355
Outstanding commission 3000