Business Accounting & Finance Question Answer 2022

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Business Accounting & Finance

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Executive summary
The assignment has covered various aspects in relation to the accounts and finances. There is the
making of the financial statements in relation to a company from the available information. By
that, the position and performance of the company are evaluated. The use of cash flow statement
is also identified and taken into consideration. There are three methods which have been used
and by that the cost of the inventory has been ascertained. That has also helped in identifying the
cost of goods sold and the profits which are made under each of the methods. The analyses of the
business are made and for that ratio have been calculated in respect of three companies and it
was done by using their profitability and liquidity. Further the ratios which are to be used for the
making of investment decisions have also been determined. The importance of having working
capital management for the business is identified. With that an explanation of the economic order
quantity is given which helps in understanding the concept in effective manner. The calculations
for the same have also been performed. The after pay service, which is offered is also understood
and the benefits and disadvantages associated with it have also been taken into consideration.

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Table of Contents
Executive summary.........................................................................................................................2
Question 1........................................................................................................................................4
i)...................................................................................................................................................4
ii)..................................................................................................................................................5
Question 2........................................................................................................................................6
i)...................................................................................................................................................6
ii)................................................................................................................................................11
Question 3......................................................................................................................................12
i).................................................................................................................................................12
ii)................................................................................................................................................12
iii)...............................................................................................................................................13
Question 4......................................................................................................................................13
i).................................................................................................................................................13
ii)................................................................................................................................................14
iii)...............................................................................................................................................16
Conclusion and recommendations.................................................................................................17
References......................................................................................................................................18

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Question 1
i)
Income statement of Home designs ltd
For the year ending 30 June 2019
Particulars Amount
Sales revenue 2,205,000
Interest income 3,100
Total income 2,208,100
Cost of goods sold 780,000
Gross profit 1,428,100
Advertising expense 46,000
Annual leave expense 25,000
Depreciation expense 60,000
Dividends paid 200,000
Doubtful debts expense 2,000
Income tax expense 274,000
Interest expense 22,000
Other expenses 36,000
Salaries and wages 286,000
Warranty expense 41,000
Total expenses 992,000
Net profit 436,100
Balance sheet of Home designs ltd
As at 30 June 2019
Particulars Amount Amount
Current assets:
Bank account 143,000
Finished goods inventory 322,000
Raw materials inventory 126,000
Trade receivables 183,400 774,400