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MNE3701 Assignment 2 (COMPLETE ANSWERS) Semester 2 2024 - DUE 12 September 2024 ;
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MNE3701 Assignment 2 (COMPLETE ANSWERS) Semester 2 2024 - DUE 12 September 2024 ;
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,MNE3701 Assignment 2 (COMPLETE ANSWERS)Semester 2 2024 - DUE 12 September 2024 ; 100%
TRUSTED Complete, trusted solutions and
explanations.
Having acquired sufficient knowledge and skills on financial
management for small business, you must demonstrate
practical competencies in constructing financial statements and
in conducting feasible financial forecasting. As a new
entrepreneur understanding financial management and
accounting, forms an integral part of running your small
business. You should also be able to forecast the financial
outcomes that could result from your decision. The projections
of business’s profits, its assets and financial requirements, and
its cash flows are essential in determining whether your
business is economically viable or not. In light of the above
citation you are expected to respond to the following
assessment criteria: QUESTION 1 • Demonstrate how you
would go about constructing financial statements of your small
business with reference to practical examples. (30)
To construct financial statements for a small business, there are
three key financial statements you need to understand and
prepare:
1. Income Statement (Profit and Loss Statement)
2. Balance Sheet
3. Cash Flow Statement
, 1. Income Statement
The income statement shows the business’s revenues and
expenses over a specific period (usually monthly, quarterly, or
annually). It helps determine whether the business is making a
profit or incurring a loss.
Components:
Revenue (Sales): This includes all income generated from
the sale of goods or services.
Cost of Goods Sold (COGS): The direct costs associated
with producing goods or services sold (e.g., materials,
labor).
Gross Profit: Revenue minus COGS.
Gross Profit = Revenue - COGS
Operating Expenses: Expenses not directly tied to
production, such as rent, utilities, marketing, and salaries.
Operating Profit: Gross profit minus operating expenses.
Operating Profit = Gross Profit - Operating Expenses
Interest and Taxes: Any interest payments on loans and
taxes payable.
Net Profit: The final profit after all expenses, interest, and
taxes have been deducted.
Net Profit = Operating Profit - Interest and Taxes
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