Preparation of Income Statement and Balance Sheet for Business Analysis

This report discusses the preparation of Income Statement and Balance Sheet for business analysis. It explains the importance of financial statements in determining a business's growth and expansion. The report also highlights the significance of understanding a company's unwanted expenses and costs that could hinder its progress. It concludes by emphasizing the need for every firm to plan in advance and work accordingly to maintain stability and sustainability in the market.

PART 2

Contents
INTRODUCTION...........................................................................................................................2
TASK...............................................................................................................................................2
Income Statement:.......................................................................................................................2
Balance sheet:..............................................................................................................................3
CONCLUSION................................................................................................................................4
REFERENCES................................................................................................................................5

INTRODUCTION
The report prepared below takes in account preparation of Income statement and balance
sheet which helps to find out what has been its related income and profit earned for the year. The
records prepared helps to determine what has been its positioning in market and how they can
generate income as well as profit and earn revenue as well. It further takes in account what
related assets are being acquired by the company in the long run and how efficiently they can be
used for better results of the business. It is necessary for every business to examine its risks and
losses which can take place over a certain period of time and how they can help them to
minimize the threats. The company further provides guidance as what can be done, how can it be
done and what related measures can be taken (Basaula, B.R., 2020.
TASK
Income statement:
It is helpful to ascertain related income earned over a period of time, what has been the cost
which a business has incurred over a period of time and which are its unwanted costs which can
be minimized during the time period. It is helpful to understand where the business stands in
competitive market and whether it has been possible or not for the business to manage its growth
and expansion and maintain its sustainability as well (DA COSTA, 2021.
Balance sheet:
It is necessary and helpful for every business to understand what has been its assets acquired and
the revenues earned as well as reserves too. It is fruitful for every business to understand its
competitive advantage and plan in advance what can be done how can be done.
Financial Statements are as under:
Income Statement:
Income Statement
Particulars Amount
Sales 58750
Total revenues 58750
Cost of goods sold 30650
Gross profit 28100
Expenses
Accounting
Advertising 2800
Electricity expense 1900

Bad debt 1714
Depreciation 375
Employee wages 3800
Insurance 350
Interest expense 600
Rent 30000
Telephone 850
Training expense 120
Vehicle expenses 230
Net Profit -14639
Balance sheet:
Balance sheet
For the year ended
Particulars
Amoun
t
Amoun
t
Assets
Non - Current Assets
Furniture and fixtures 12000
Motor vehicles 24000
office equipment 890
Total non-current
Assets 36890
Current Assets
Prepaid insurance 3850
Prepaid rent 25000
Inventory 21860
Trade Receivable 34280
Total Current Assets 84990
Total Assets 121880
Liabilities
Shareholders Fund
Capital 24000
Add: Net loss -14639
Less: Drawings 7200 2161
Current Liabilities
Outstanding Wages 950
Outstanding loan 60000
Trade Payables 27000
Others liability 31249
Bank OD 520
Total Liabilities 12188

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CONCLUSION
The report prepared above helps to conclude and assert that financial statements as well
as records such as Balance sheet and income statement helps to understand its growth and
expansion which took place over a period of time. It further counts relative measures that a
business could plan keeping future in mind. It also helps to serve as a guide in the eyes of law if
any dispute takes place and understand what could be its unwanted expenses as well as cost
which would hinder and result as a hurdle for company. It is thus necessary for every company to
understand which areas are demanding special attention and how can they find related solutions
well in time. It is useful and fruitful for every business to understand its requirements and work
accordingly and fight competition for maintaining stability and sustainability in the market. It is
further necessary for every firm to plan in advance what must be done and how it can be done.

REFERENCES
Books and Journals
Basaula, B.R., 2020. Audit Report and Audited Entity Financial Statement-18.19.
DA COSTA, V.A.S.C.O., 2021. Timor-Leste-EAST ASIA AND PACIFIC-P155541-Sustainable
Agriculture Productivity Improvement Project-Audited Financial Statement.
Manuja, A., 2019. Strategic Public Sector-Financial Statement March 31, 2019 FINAL (11.10.
19).
Nduom, E.J., 2021. Ghana-AFRICA WEST-P120026-GH: Sustainable Rural Water & Sanit
Serv-Audited Financial Statement.
URI, S., 2021. West Bank and Gaza-MIDDLE EAST AND NORTH AFRICA-P168576-Real
Estate Registration Project-Audited Financial Statement.