Bon Rian Despabeladero

Finance

1.
INCOME STATEMENT
AS OF THE YEAR 2009

SALES: $760,000 CASH SALES: $760,000

LESS: LESS: COSTS ($300,000)
SALES RETURNS AND
ALLOWANCES: ($690,000) TOTAL
NET PROFIT/LOSS: $460,000
COST OF SALES: $300,000
RETURN CREDITS: ($690,000)
TOTAL TOTAL
NET PROFIT/LOSS: ($230,000) PROFIT/LOSS: ($230,000)

Using the accrual basis of accounting a financial
manager can see what happens to the business
accurately as transactions are recorded when they
occur this will lead to a faithful and actual
condition of the business to be reflected in it’s
financial statements.
Using the cash basis method although same results
can be achieved it does not always depict the
accurate current state of the business because
transactions are recorded when cash changes
hands this will often result in overstating or
understating the cash of the business as a financial
manager this could hurt more rather than help the
business.

2. A. INCOME STATEMENT
CATHY CHEN ACCOUNTING SERVICES
For the year ended Dec. 31 2012

REVENUES
Accounting Revenues $360,000

EXPENSES
Salary Expense $ 92,000
Salary tax and benefit expense $ 34,600
Office supplies Expense $ 10,400
Travel and Entertainment Exp. $ 17,000
Rent Expense(2,700x12) $ 32,400
Depreciation Expense $ 15,600
Interest Expense $ 15,000

TOTAL EXPENSES $ 217,000

INCOME BEFORE TAX $ 143,000

INCOME LESS TAX $ 108,000

NET PROFIT $ 35,000

B. Ms. Cathy Chen’s financial performance during the year 2012 ended with a Net profit of $35,000
considering it is her first year in business is acceptable.