Introduction to Accounting and Finance

INTRODUCTION TO ACCOUNTING AND
FINANCE (ONLINE TEST)

SECTION A
Answer 1:
Income statement of P. Piper trader
For the year ended 30th September, 2019
Amount £ Amount £
Sales £339,742
Less: COGS
Opening stock £24,953
Add: Purchases £279,600
Less: Closing stock £21,620 £282,933
Gross profit £56,809
Less: Operating and administration
expenses
Rent £2,250
Light and heat £792
Insurance £507
Salaries £10,587
Stationery and printing £1,228
Telephone and postage £862
General expenses = 3407
Less: Advance expenses = 407 £3,000
Travelers commission and expenses £16,542
Bad debts written off £552
Depreciation on furn. And equip.@20% £480 £36,800
Add: Other incomes:
Discount received £1,830
Less: Discount allowed £862 £968
Net profit before interest and tax £20,977
Less: Income tax £976
Net profit after tax £20,001
Statement of financial position of P.Piperas
at 30th September, 2019
Amount
£
Amount
£
ASSETS
Non-current assets:

Office furniture and equipment 2400
Less: Depreciation = 480 £1,920 £1,920
Current assets:
Inventories £21,620
Trade receivables £31,833
Cash £48
Prepaid expenses £407
Bank £11,005 £64,913
Total Assets £66,833
Owner's equity and Liabilities
Capital £40,398
Less: Drawings £8,147
Add: Retained earnings £20,001 £52,252
Non-current liabilities:
Current Liabilities:
Trade payables £13,605
Outstanding rent £750
Outstanding lighting and heating £226 £14,581
Total liabilities £66,833
Answer 2(a)
i. Going concern concept:
The Going concern concept is one of the key accounting guidelines. It will accept during and
after the cash period, after which an organization will finalize its current plans, utilize existing
resources and continue to fulfill its cash commitments. Fundamentally, it is a belief that the
organization will remain in business and the speculation of its benefits will continue. This hidden
direction is otherwise known as the idea of proceeding with worry.
If an organization leaves the business, its benefits consistently lose the value that they once relied
on the industry report. This is because the organization's unique utility resources (for example,