This 18 page paper answers five multipart questions set by the student, looking at the completion of income and balance sheets and why a business ay not make a profit in the first year with the fictional case of Kassick Co, different methods of depreciation using periodic and perpetual methodologies, how wages deduction and how share issuances and dividends will be recorded.
Name of Research Paper File: TS14_TEproquest1.rtf
Unformatted Sample Text from the Research Paper:
coasts that have been incurred. Some expenses have been incurred but are stated as accrued rather than paid, so these will show not as expenses yet but as liabilities on
the balance sheet and will show as paid when they are satisfied. Expenditure of capital assets is not shown on this sheet despite the cash flow being an expense
but it is not an expense that is shown on the income statement apart form in terms of depreciation, this may also be seen as satisfying the matching concept.
However, it is possible to place depreciation onto the income statement if the student wishes; this can be calculated in whichever way the
student chooses such as straight-line, reducing balance or sum of the digits, However, as this has not been specified in the questions we will assume that this is not required.
If it is then it is simply a further addition into the costs. The income statement is as follows. Income statement Revenue 910,000 Cost of goods 580,000 Gross
profit 330,000 Salaries 380,000 Rent 110,000 Utilities 36,000 Net profit -196,000 The balance sheet can
also be prepared. There is borrowing of 500,000 and $1,000 is raised with the sale of the shares. The purchase of the capital assets and the loss incurred in the
first year are deemed to have come from the borrowed and the share capital the remaining level of this loan and investment is assumed to be still available in cash
or cash equivalents. As there is a loss in the first year this means there is a decrease in the level of equity and brings this to a negative level.