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FULL NAME:STUDENT NUMBER:
MODULE: MNE3701
ASSIGNMENT NUMBER: 2
UNIQUE Number
I, ..................... with student number,..................... hereby declare that I have read
the Unisa policy on plagiarism and the student disciplinary procedures documents
made available on the myUnisa module site; and I understand what constitutes
plagiarism, collusion and academic fraud. I declare that this assignment is my own
original work and that I have not allowed anyone else to borrow or copy my work.
Good luck with your assignment!
Question 1
Creating the components of a financial statement
The financial statements prepared for most small businesses comprise a balance sheet and an
income statement
Usually these are prepared by an accountant. But with the help of computer software, you may be
able to prepare your own financial statements. If you need to prepare financial statements for a
third party, such as a banker, sometimes the third party may request that the financial statements
be prepared by a professional accountant or certified public accountant.
Preparing a balance sheet
Also called a statement of financial position, a balance sheet is a financial snapshot of your business
at a given date in time. It lists your assets, your liabilities and the difference between the two, which
is your owner's equity, or net worth. The accounting equation (assets = liabilities + owner's equity) is
the basis for the balance sheet.
The balance sheet is prepared after all adjusting entries are made in the general journal, all journal
entries have been posted to the general ledger, the general ledger accounts have been footed to
arrive at the period end totals, and an adjusted trial balance is prepared from the general ledger
amounts.
, All amounts should be rounded to the nearest dollar, like in this example of a balance sheet for a
sole proprietorship:
Beta Sales Company
Balance Sheet
December 31, 2023
Assets Liabilities and Capital
Current Assets Current Liabilities
Accounts
Cash R12,300 R8,900
payable
Accounts receivable 22,900 Wages payable 11,525
Inventory 32,090 Total Current Liabilities R20,425
Prepaid Insurance 2,500 Long-Term Liabilities
Bank Loan
Total Current Assets R69,790 17,500
Payable
Fixed Assets Total Long-Term Liability 17,500
Equipment 100,200 Total Liabilities 37,925
Less: Accumulated
(78,321) Capital
Depreciation
Tom Beta,
Total Fixed Assets 21,879 53,744
Capital
Total Assets R91,669 Total Liabilities/Capital R91,669
Preparing an income statement
Also called a profit and loss statement, or a "P&L," an income statement lists your income, expenses
and net income (or loss). The net income (or loss) is equal to your income minus your expenses. Your
business's tax return will use a variation of the income statement to determine your potentially
taxable income.
The income statement is prepared after all adjusting entries are made in the general journal, all
journal entries have been posted to the general ledger, the general ledger accounts have been
footed to arrive at the period end totals, and an adjusted trial balance has been prepared from the
general ledger totals.
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