Financial Performance Analysis: Accounting Statements, May 2019

This report provides a detailed analysis of the financial statements for a business as of May 2019. It includes an examination of the trial balance, profit and loss statement, and balance sheet. The analysis identifies key financial metrics, such as revenue, expenses, assets, and liabilities. The report highlights that the business incurred a loss during the period due to higher expenses than revenue, and it suggests improvements to the operational structure to reduce costs. The balance sheet shows the financial position of the business, segregating assets and liabilities into current and non-current categories. Charts are used to visually represent the expenses, assets, and liabilities, providing a clear understanding of the financial data. The report concludes by emphasizing the need for cost management to improve profitability.

Running head: ACCOUNTING STATEMENT ANALYSIS
Accounting Statement Analysis
Name of the Student:
Name of the University:
Author’s Note

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ACCOUNTING STATEMENT ANALYSIS
Table of Contents
Introduction......................................................................................................................................2
Discussion........................................................................................................................................2
Conclusion.......................................................................................................................................8
Reference.........................................................................................................................................9

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ACCOUNTING STATEMENT ANALYSIS
Introduction
The objective of the discussion which is conducted is to evaluate the financial
information which is presented and how the financial data which is available provides an
understanding of the financial estimates of the business during the period (Schaltegger and
Burritt 2017). The performance in terms of financial estimates for the business would be
assessed on the basis of the income statement, balance sheer and trail balance which is prepared
for the business (Edwards 2013). The three statement which is prepared by the business provides
ample information for the purpose of taking appropriate decisions regarding the business.
Discussion
The financial statements which are considered in the analysis includes profit and loss
statement, balance sheet and trial balance of the business. The trial balance is prepared first and
on the basis of the information which is shown in the trial balance, the profit and loss statement
and balance sheet is prepared by the management of the company (Needles, Powers and Crosson
2013). The trial balance of the business effectively shows financial accuracy of the information
and the trial balance appropriately shows the assets, liabilities, income and expenses of the
business for the current period.

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ACCOUNTING STATEMENT ANALYSIS
Figure 1: Trial Balance for the Business
Source: (Created by the Author)
The trial balance of the business is formulated by the accountant for effectively assessing
the accuracy of the items which are included in the annual reports of the business.
On the basis of the trial balance of a business, the top management prepares the profit and
loss statement. The income statement also known as profit and loss account include all income
and expenses of the business for the period. The profit and loss statement which is prepared by
the business is also for the purpose of estimating the profits or loss which is made by the
business from operations during the period.

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ACCOUNTING STATEMENT ANALYSIS
Figure 2: Profit and Loss Account for the Business
Source: (Created by the Author)

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ACCOUNTING STATEMENT ANALYSIS
Advertising
Bad Debt Expense
Depreciation
Fuel expense
Insurance
Interest Expense
Office Expenses
Rent
Wages and Salaries
0 1000 2000 3000 4000 5000 6000 7000 8000 9000 10000
469.2
180.95
758.34
300
181.82
1784
300
9090.91
8000
Total Expenses
Figure 3: Chart Showing all expenses of Business
The profit and loss account for the business effectively shows the revenue earned by the
company during the considered period is shown to be $ 625. The profit and loss statement which
is shown by the business includes different costs which are incurred by the business (Brown
2014). The above income statement which formulated by the management appropriately shows
that the total expenses is much more than the revenue which is generated by the business. This is
the main reason due to which the business has incurred losses during the period. The total loss
which is incurred by the business is shown to be $ 20,440.22. This also shows that the
management of the company needs to improve the operational structure of the business and take
steps to reduce the overall costs of the business.
The balance sheet is prepared by the business for providing appropriate insights regarding
the financial position of the business (Demski 2013). The balance sheet appropriately shows the
assets and liabilities of the business. The assets are used by the business for the purpose of

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ACCOUNTING STATEMENT ANALYSIS
generating profits while liabilities are payments which are outstanding and are incurred while
performing the activities of the business.
Figure 4: Balance Sheet for the Business
Source: (Created by the Author)

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ACCOUNTING STATEMENT ANALYSIS
Total Current assets
Total Non-current assets
Total Current Liabiilities
Total Non-current
liabilities
0 100000 200000 300000 400000 500000 600000 700000 800000
Assets and Liabiliti es
Figure 5: Chart Showing Assets and Liabilities of Business
The balance sheet of the business is prepared showing all the assets and liabilities of the
business along with values of equity. The balance sheet appropriately shows segregation with
assets and liabilities of the business in the form of current figures and non-current figures
(Hribar, Kravet and Wilson 2014). The current assets are of short term nature and includes assets
such as cash, inventory, debtors. On the other hand, non-current assets are of long term nature
and comprises of assets which are used by business year after year such as property, machinery,
equipment. The segregation for the liabilities of the business are also similar.

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ACCOUNTING STATEMENT ANALYSIS
A c c o u n t s R e c e i v a b l e
A d v e r ti s i n g P r e p a y m e n t
a l l o w a n c e f o r d o u b tf u l d e b t s
C a s h a t B a n k
I n t r e s t R e c e v i a b l e
I n v e n t o r y
I n v e s t m e n t
O ffi c e s u p p l i e s
P r e p a i d I n s u r a n c e
P r e p a i d R e n t
-100,000.00 0.00 100,000.00 200,000.00 300,000.00
Current Assets
Figure 6: Chart Showing Current Assets of Business
Conclusion
The above analysis effectively shows that the business needs to maintain the costs as the
same is affecting the profits for the business during the period. The financial position of the
business is shown to be appropriate which represents the assets and liabilities of the business. In
addition to this, the discussion above shows trial balance which is prepared for checking the
arithmetical accuracy of the items which are to be represented in the financial statements of the
business.

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ACCOUNTING STATEMENT ANALYSIS
Reference
Brown, R., 2014. A history of accounting and accountants. Routledge.
Demski, J., 2013. Managerial uses of accounting information. Springer Science & Business
Media.
Edwards, J.R., 2013. A History of Financial Accounting (RLE Accounting). Routledge.
Hribar, P., Kravet, T. and Wilson, R., 2014. A new measure of accounting quality. Review of
Accounting Studies, 19(1), pp.506-538.
Needles, B.E., Powers, M. and Crosson, S.V., 2013. Principles of accounting. Cengage
Learning.
Schaltegger, S. and Burritt, R., 2017. Contemporary environmental accounting: issues, concepts
and practice. Routledge.