BCA ACADEMY

SCHOOL OF BUILDING & DEVELOPMENT

MANAGEMENT SKILLS

Tutorial 02 / 03: Financial Statements

1. What is the purpose of Income Statement?

Shows the flow of sales and costs over a period
Shows whether the business making profit or loss

2. Expenses are incurred during buying of goods for re-sale.

True or False? Explain.
False. Expenses are charges incurred in the course of
business activities not related to the cost of goods sold.

3. Sales revenue is the only type of revenue a company can have.

True or False? Explain
False. Revenues are earned for the sale of goods or services.

4. Calculate the cost of goods sold for the period using the following information:
Opening Inventory $400
Purchases during the period $600
Closing Inventory $300

Cost of goods sold = (400+ 600)- 300

= 700

5. What is the gross profit for question (4) above if the sales for the period were $12,000?

Gross profit = 12000 – 700 = 11300

6. Define the equation for balance sheet.

Non current assets + current assets = equity + liabilities

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7. The following is the Trial Balance as at 31December, 2016 after the first year’s trading of
Brown Engineering.

Trial Balance as at 31 December 2016

Debit Credit
$'000 $'000
Equipment rental 1,750
Purchases 52,930
Sales 68,400
Return inwards (sales return) 340
Return outwards (purchase return) 540
Utilities expenses 990
Salaries and wages 8,300
Motor Vehicle running expenses 3,500
Premises 12,000
Furniture 1,990
Receivables 5,400
Sundry expenses 2,300
Payables 9,200
Cash at bank 17,500
Motor Vehicle 19,000
Capital 47,860
126,000 126,000

The closing Inventory as at 31 December 2016 was $24,000

Required:

a) Prepare Brown Engineering‘s Income Statement for the year ended 31 December, 2016.

b) Prepare Balance Sheet as at 31December, 2016 for Brown Engineering.

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8. The following balances are extracted from the book of Silver Construction as at 30 June,
2016.

Trial Balance as at 30 June 2016

Debit Credit
$’000 $’000
Rental 980
Purchases 37,600
Sales 52,400
Return inwards (sales return) 1,850
Return outwards (purchase return) 1,670
Utilities expenses 1,250
Salaries and wages 5,300
Motor Vehicle running expenses 3,480
Machinery 13,600
Furniture 720
Receivables 4,400
Staff welfare 2,600
Payables 8,900
Cash at bank 17,500
Motor Vehicle 19,000
Capital 45,310
108,280 108,280
The closing Inventory as at 30 June 2016 was
$17,600

Required:

a) Prepare Silver Construction’s Income Statement for the year ended 30 June, 2016.

b) Prepare Balance Sheet as at 30 June, 2016 for Silver Construction.

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***** End of Tutorial *****