Accounting for Managers: Financial Statement Analysis

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ACCOUNTING FOR MANAGERS
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Table of Contents
Question 1........................................................................................................................................3
A...................................................................................................................................................3
B...................................................................................................................................................5
Question 2........................................................................................................................................6
A...................................................................................................................................................6
B...................................................................................................................................................7
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Question 1
A.
Statement of Financial Performance for Ken Kennett Building Services
Statement of Financial Performance
Particulars Amount Amount
Revenue
Building Services provided $ 550,000
Less: Expenses
Business supplies used $ 310,000
Wages Paid to Employees $ 150,000
Add: Wages Owned to Employees $ 3,500
Motor vehicle expenses $ 5,600
Electricity and Telephone Expenses $ 4,000
Total Expenses $ (473,100)
Net Profit $ 76,900
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Statement of Financial Position for Ken Kennett Building Services
Statement of Financial Position
Particulars Amount Amount
Equities and Liabilities
Equities
Shareholders Fund (Balancing Figure) $ 97,600
Less: Drawings
$
(5,700)
Add: Profit $ 76,900
Total Equity $ 168,800
Liabilities
Wages Owned to the employees $ 3,500
Amounts owed to suppliers $ 30,000
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Total Liabilities
$
33,500
Total Equities and Liabilities $ 202,300
Assets
Current Assets
Cash in Shoebox
$
500
Cash in Bank Account $ 3,800
Accounts Receivable/Amount owned by
Customers $ 80,000
Non-Current Assets
Building Supplies $ 18,000
Equipment $ 68,000
Motor Vehicles $ 32,000
Total Assets $ 202,300
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Working Notes
Cash A/c
Particulars Amount Particulars Amount
To Balance B/D
$
23,800 By Wages Paid to Employees
$
150,000
To Business services A/c
$
470,000 By Motor vehicle expenses
$
5,600
By Electricity and Telephone
Expenses
$
4,000
By Building Supplies Used
$
328,000
By Drawings
$
5,700
By Balance C/D
$
500
Total
$
493,800 Total
$
493,800
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Debtors A/c
Particulars Amount Particulars Amount
To Business services A/C
$
550,000 By Cash A/C
$
470,000
By Balance B/D
$
80,000
Total
$
550,000 Total
$
550,000
Wages A/c
Particulars Amount Particulars Amount
To Cash
$
150,000 By Profit and Loss A/c
$
153,500
To Wages Owned to
Employees
$
3,500
Total
$
153,500 Total
$
153,500
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Building Supplies A/c
Particulars Amount Particulars Amount
To Cash
$
328,000 By P&L A/c
$
310,000
By Balance B/D
$
18,000
Total
$
328,000 Total
$
328,000
It can be seen that the amount of assets are not equal to the liabilities thus it can be seen that the
company the amount of balancing figure will be considered as equity or shareholders fund for
the company which was invested by promoters.
B.
Fiscal summaries are the reports which are set up by the administration of the organization to
indicate the money related position and execution of the organization (Lusardi and Tufano,
2015). It ought to be noticed that budget summaries incorporate monetary record, Profit and
misfortune account, income proclamations and changes in value. In this way it is significant for
each partner to pick up a comprehension or diagram of the budget summaries of the organization.
Ken Kennett Building Services are occupied with the matter of lodging businesses and has any
formal bookkeeping framework and does not keep up the budget summaries of the
organization.Organization is in chats with the provider of structure material who needs the
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diagram of the organization before making such arrangements with the organization (Lusardi and
Tufano, 2015). Budget summaries of the organization give the general perspective on the
organization for each association as it gives subtleties of the liquidity position of the organization
and expressing whether the organization would almost certainly cover its liabilities effectively
with the accessible resources of the organization. In this way it is significant for each provider to
keep a track on the fiscal reports of the organization to choose whether the provider ought to go
into contract in view of the association or not keeping the liquidity position and benefits of the
organization from the money related statements.Thus from the examination of budget reports it
tends to be seen that the organization has enough current advantages for spread the present
commitments of the organization and provider should push ahead to make supplies of structure
material (Lusardi and Tufano, 2015).
Organization's present resources are high and the present proportion is more than 2.5 occasions
in this manner the organization will almost certainly satisfy the providers of the organization to
the soonest. Additionally the organization anyway can satisfy the providers yet the reason for
stress for the provider is that the present resource of the organization is reliant upon the
installment which organization possesses from the clients. On the off chance that such measure
of records receivable is acknowledged inside timeframe, at that point all things considered it will
almost certainly satisfy the provider else it would involve worry for the providers identifying
with arrival of installment (Paci, et., al., 2014).
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Question 2
A.
Calculation of items:
1. Profit/ Loss for the year
Computation of Profit/Loss
Particulars Amount Amount
Accounting Services Income $ 9,750
Less: Expenses
Office Supplies Expenses $ 840
Telephone Expenses $ 255
Motor vehicle expenses $ 330
Advertisement expenses $ 510
Total Expenses $ (1,935)
Profit $ 7,815
2. Total Assets at the end of the Year
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Computation of Total Assets
Particulars Amount
Current Assets
Office Supplies $ 1,500
Accounts Receivable $ 1,500
Cash at Bank $ 8,445
Non-Current Assets
Computer Equipment $ 8,250
Total Assets $ 19,695
3. Total Liabilities at the end of the Year
Computation of Total Liabilities
Particulars Amount
Bank Loan $ 7,500
Accounts Payable $ 1,080
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Total Liabilities $ 8,580
4. Clive Calmer’s capital balance at the end of the year
Computation of Capital Invested
Particulars Amount
Total Assets $ 19,695
Less: Liabilities $ (8,580)
Less: Profit for the year $ (7,815)
Capital at the end of the period $ 3,300
5. Net cash inflow/outflow for the year
Net Cash Inflow/Outflow Amount Amount
Net Cash Flow from Operating Activities
Receipts from accounting servicves $ 8,250
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