Business Study
Essay by people • December 17, 2011 • Essay • 1,573 Words (7 Pages) • 1,574 Views
Question1:
Part 1
(a)
Houdini's income statement for the week 1 July to7 July 2007
Fees for magic show 650
Less, direct costs of the income 0
Gross income 650
Less expenses 0
Travel expenses 15
Net profit £635
The income statement shows that Mr. Houdini has made total profit £635 in the 1st week of July 2007
(b)
Houdini's fixed and net assets at 7 July 2007
Long-term assets
Costume 1500
equipments 1000
Playing cards 200
2700
Less account depreciation 0
2700
Short-term assets
Bank balance 650
Less short-term liabilities
Creditors 200
Working capital 450
Total investment 3150
Less long-term liabilities
0
Net assets 3150
Part2
(a)
Cash account for Mr. Houdini from 8 July to 14 July 2007
Cash inflow
Party cash revenue 100
Fee cash revenue 100
Cash back for unused feed 50
Third party 70
320
Cash outflows
Rabbits 180
Rabbits food 150
Travel expenses 15
Train ticket 8
Cleaning 15
Payments to Alf cooks 200
568
Net inflow of cash 248
Opening balance in the bank 650
Closing balance in the bank 402
(b)
The cash account purpose is to comparison between what has gone in and out over the period of time since the balance was last calculated, Therefore it is exploring the companies inflows and outflows of cash, which is necessary to companies and business to predict when and how much money is coming in and when they will need more or less for there business operations.
Cash account some times called Cash-flow statement, which is the same thing because cash inflow provides a look at the cash into the company , and cash-outflow is the cash out of the company.
Cash-flow statement is helping the business to determine either cash is enough or not to pay for there expenses and other operations.
Part3
(a)
Houdini's income statement from 1 July to 31 Dec 2007
Sales of novelties (1500+350)=1850
Fees as entertainer 17350
19200
Less costs of novelties sold (1000+1100-50)= 2050
Goss profit 17150
Less expenses
Depreciation magician equipments 540
Depreciation apparatus 400
Wages (1200+100) 1300
Travel expenses (1500-50) 1450
Cleaning 110
Rabbit food 100
Total expenses 3900
Net profit 13250
(b)
The purpose of (profit and loss) income statement is to show what income has been earned and what expenses were incurred in earning it, and the difference between what has earned and the earning or revenues expenses is the net profit of a company over a period of time.
If the earned or income was larger than expenses that's profit, or a loss if the expenses is larger than the income, and that's why some times it is called profit and loss statement.
Therefore, the income statement is corresponding with the financial performance of a business.
Part4
(a)
Houdini's balance sheet at 31 July 2007
Long-term assets
Costume 1500
equipments 1000
Playing cards 200
2700
depreciation 540
2160
Disappearing lady apparatus 2500
Less account depreciation 400
2100
Long-term assets after depreciation deduction £4260
Short-term assets
Cash on hand 460
stock 50
Account receivable 350
Detors "Mr peter" 180
unused train ticket 50
Cash in bank 120
Total short-term assets £1210
Less short-term liabilities
Creditors 1100
Accrued wages 100
Total short-term liabilities 1200
Working capital 10
Total
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