Introductory Financial Accounting Assignment

Added on - 28 May 2020

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Running head: INTRODUCTORY FINANCIAL ACCOUNTINGIntroductory Financial AccountingName of the Student:Name of the University:Authors Note:Table of Content
INTRODUCTORY FINANCIAL ACCOUNTING1A. Drafting the Income Statement and Balance Sheet Statement for Schutz Building Servicesfor the current period:.................................................................................................................2B.1 Depicting how financial statement could help the supplier of building to trade or not tradewith Johan:.................................................................................................................................3B.2 Depicting the parts of financial statement, which could have positive indicator for SchutzBuilding Services supplier and indicate the item that may be concern for suppliers:...............5Reference and Bibliography:....................................................................................................10
INTRODUCTORY FINANCIAL ACCOUNTING2A. Drafting the Income Statement and Balance Sheet Statement for Schutz BuildingServices for the current period:Schutz Building ServicesIncome statement for the year endedParticularsAmountAmountIncomeService revenue$ 550,000.00ExpensesWages expense$ 153,500.00Supplies expense$ 310,000.00Motor vehicle expense$ 5,600.00Electricity and telephone expense$ 4,000.00$ 473,100.00Profit$ 76,900.00Schutz Building ServicesBalance Sheet statement for the year endedParticularsAmountAmountAssetsCurrent assetsCash at bank$ 3,800.00Cash at hand$ 500.00Supplies$ 18,000.00Accounts receivable$ 80,000.00$ 102,300.00Non-Current assetsEquipment$ 68,000.00Motor vehicle$ 32,000.00$ 100,000.00Total Assets$ 202,300.00LiabilitiesCurrent liabilitiesWages payable$ 3,500.00Accounts payable$ 30,000.00Total Liabilities$ 33,500.00Net Assets$ 168,800.00EquityJohan Schutz Capital$ 168,800.00Equity$ 168,800.00
INTRODUCTORY FINANCIAL ACCOUNTING3B.1 Depicting how financial statement could help the supplier of building to trade or nottrade with Johan:From the evaluation of above tables, financial statement of Schutz Building Servicescould be identified, which could allow suppliers to identify whether to trade or not trade withthe organisation. Schutz Building Services mainly has a total equity of $ 168,000, which canbe compared with its total liabilities that is at the levels of $ 33,500. This difference in totalliabilities and total equity directly state the financial viability of the organisation to supportpayment to suppliers. This also indicates that the company has been efficiently paying theirsuppliers at time, which is why the accounts payable amount is relevantly lower than theaccount receivable amount. Atoom, Malkawi and Al Share (2017) stated that efficiency ratioallows management’s ability to improve cash outflow and inflow of the organisation.Furthermore, net total assets of the organization are mainly at $168,800, which isderived by deducting total assets from total liabilities. This indicates that the company'soverall assets are more than the liabilities, which depicts its financial position and strength tosupport future financial obligations. The company’s current asset is mainly at the levels of $102,300 and current liabilities at the levels of $ 33,500, which is relatively adequate tosupport Schutz Building Services ability to pay their dues to its suppliers.Bodie, Kane andMarcus (2014) indicates that companies having low current liabilities and high current assetsare able to support unexpected expenses and conduct smooth operations.However,the main concern is relatively towards account receivable of SchutzBuilding Services, as they are not concerned about receiving payments from customer. Thislow concern regarding payment collection from customers could lead to cash stagnation anddirectly hamper ability of the company to support its future payment. This negligence incollecting account receivables is mainly identified as negative indicator, which portray lowcapability of Schutz Building Services to support future expenses. The continued negligence
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