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Written Assignment Unit 1

Name of the Student

Department

BUS 5112 Management Accounting

Name of professor

Due April 14, 2022

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Written Assignment Unit 1

Introduction

Accounting is important in business it helps one to keep track of expenditures and

incomes, and keep compliance on alert. It also provides quantitative financial information to be

used in decision-making for investors, governments, and business management (Apostolides,

2016). In the paper, we will understand how the missing value of the 2018 income statement,

balance sheet, and cash flow of Polly's Pet Products has been defined and applied.

Income statement

To start with, the income statement is the financial statement that is being completed and

it is crucial because when the accrual method of accounting is used, it shows how much profit a

company is making as of the time interval shown in the heading. The period normally varies as

the business decides on this. The income statement does not show cash receipts or payouts but

deals with losses gains and also expenses taken or done by the business. In Polly Pet's product,

we will work to complete the missing values of the balance sheet, statement of cash flow, and

income statement.

According to the information provided in the sheets, the values in the balance sheet and

statement of cash flow can be calculated and obtained. However, this should be achieved once

we find the missing values in the income statement. For this reason, we will complete the values

for the income statement.

The sum of operating costs and revenue is called the gross profit.

Where,

Gross profit = revenue + operating cost

Since the operating cost is the missing value, the equation would be
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Operating cost = Revenue – Gross profit

Operating cost = 650,00 – 205, 000

Thus

Operating cost = 445,000

The operating cost is the difference between gross profit and expenses involved. Further,

the income before the provision for taxes is the difference in the operating income and other

expenses.

Net income refers to the difference between income before provision for income taxes and

provision for income taxes. The sum of retained earnings, net income, and starting balance.
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Statement of Cash Flow

Secondly, the main financial statement is called the statement of cash flow. It is used to

report the amount of money generated and used during the time interval as shown in the heading.

In addition, the income statement is the same period.

According to (Berkau, 2020), he stated that income statement is prepared under the

accrual basis of accounting, the revenues reported may not have been collected or turned into

cash. Similarly, the reported expenses on the income statement might have failed to be paid.in

the balance sheet, one can decide to make a few changes to determine facts but the statement of

cash flow already has all the information.

In the statement of cash flow in Polly Pet's Product statement, the first value that is

missing is cash paid to suppliers and employees. To calculate this cash, we get the sum of paid

interests, taxes, and the net cash provided by operating activities. Then subtract the sum from the

cash received from customers.

Thus, we say,

cash paid out to suppliers and employees = (interest paid + taxes paid + Net cash

provided

by operating activities) - cash received from customers

cash paid out to suppliers and employees = (5,000 + 10,000 + 185,000) – 600,000

cash paid out to suppliers and employees = 400,000

in the net cash from financing activities, we subtract the sum of new loans and shared stock to

repay loans

That is
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net cash provided by financing activities = (new loans + issuance of common

shares of stock)- repayments on loans

net cash provided by financing activities = (50,000 + 5,000) – 45,000

net cash provided by financing activities = 10, 000

The net change in cash would be,

the net change in cash = [(Net cash provided by operating activities + Net cash provided

by financing

activities) - Net cash used in investing activities]

net change in cash = (185,000 + 10,000) – 25,000

net change in cash = 170,000

The cash balance, at the end year, is the sum of the net change in cash and the Cash balance, at

the beginning of the year which is 200,000.

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Balance Sheet

It is used to show the liabilities and assets of a business and the amount the shareholders

own. It helps the business determine the worth of a company or business (Adler, 2013).

It is calculated as follows

Assets = Liabilities + Equity

In the Polly Pet’s Product balance sheet, the missing value of cash is from the Cash

balance, the end of the year of the Statement of cash flow. Getting the sum of the current assets

is the total current assets. However, total assets refer to the sum of fixed assets and long-term

assets.

Accrued expenses are expenses that are recognized at the time they are incurred, even

though cash has not yet been paid. These expenses are paired up against revenue via the

matching principle from the GAAP (Generally Accepted Accounting Principles).

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The returned earnings are called the Retained Earnings, Ending Balance from Income

Statement. Thus, the total stockholder's equity is the sum of Retained Earnings, Common stock,

and additional paid-in capital.

Account Liability

This refers to the general ledger account where the debts, customer deposits, obligations,

and customer payments records are kept. Common liability accounts under the accrual method of

accounting include Accounts Payable, Accrued Liabilities, Notes Payable, Unearned Revenues,

and Deferred Income Taxes.

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Conclusion

In conclusion, the Net income at the end of the year increased as reflected in the

Retained earnings, Ending Balance in the income statement. Additionally, the cash

balance cash flow in the end-year statement increased. For this reason, I will conclude

that the company finished the year with profits.

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References

Adler, R. (2013). Management Accounting. Routledge.

Apostolides, N. (2016). Management Accounting for Beginners. Routledge.

Berkau, P. C. (2020). Management Accounting: International Syllabus. UVK Verlag.