(Department of Management Sciences)

Class : BBA Section : A

Subject : FINANCIAL ACCOUNTING - I

Assignment # 2
Name : HARIS BIN TARIQ Roll no :232222
Instructions :
 HITESH
ACCOUNTING EQUATION
FOR THE YEAR ENDED: 2020

ASSETS = LIABILITY + CAPITAL

CASH + PURCHASHES + FURNITURE + RENT + SALARY + DEBTORS = CREDITORS

250,000 + 24,000 = + 24,000 + 250,000
-4000 + 4000
246,000 + 28,000 + 1500 = 24,000 + 250,000
-1500

244,500 + 28,000 + 1500 = 24,000 + 250,000

-1000 - 1000

243,500 + 28,000 + 1500 + 3000 = 24, OOO + 249,000

-3000
240,500 + 28,000 + 1500 + 3000 = 24,000 + 249,000

+ 1000 + 1000
241,500 + 28,000 + 1500 + 3000 = 24,000 + 250,000

-4000 -4000

237,500 + 28,000 + 1500 + 3000 + 2000 = 20,000 + 250,000

-2000
235,500 + 28,000 + 1500 + 3000 + 2000 + 1700 = 20,000 + 250,000

- 1700

235,500 + 26,300 + 1500 + 3000 + 2000 + 1700 = 20,000 + 250,000

= 270,000 = 270,000
Question#2: (A) What is Balance Sheet, Income Statement, Statement of Owner’s equity and Statement of Cash Flows?

BALANCE SHEET:
A statement of assets, liabilities, and capital of a business or other organization at a particular point in time, detailing the balance of income and expenditure over the preceding period.

INCOME STATEMENT:
An income statement shows a company`s revenues, expenses and profitability over a period of time.

STATEMENT OF OWNER`S EQUITY:

A one-page report showing the difference between total assets and total liabilities, resulting in overall value of owner`s equity.

STATEMENT OF CASH FLOWS:

A cash flow statement summarizes the amount of cash equivalents entering and leaving a company.

OWNER`S EQUITY:
The share of a company`s net assets that the owner – or owners – can claim as their own.

LIQUIDITY:
It means how quickly you can get your hands on your cash.
Question#2: (B) Draft a format for Balance Sheet and Income Statement

paypsi
Income Statement
Year ended December, 2022

Sales -------
Costs and Expenses: ---------
Materials and production ---------
Marketing and admin ------------
R&D ------------
Other ------------
-----------

Income before taxes ----------

Income taxes -----------
Net income ------------
Net income—minority interests ------------
Net income—Merck shareholders ----------------

Basic earnings ------------

 BALANCE SHEET
Peypsi
Balance sheet
As at December 31,2023

Assets $ Liabilities and Stakeholder’s equity $

Current Assets: Liabilities:

Cash ------------ Accounts payable ---------------
Accounts receivable ------------ Salaries payable ---------------
------------ ---------------
Inventory ------------ Short term loan payable ---------------
Prepaid Expenses ------------ Income Tax Payable ---------------
Short term investments ------------ Unearned revenue ---------------
------------ ---------------
Total Current assets
------------ ---------------
------------ Total Liabilities ---------------
Fixed Assets: ------------ Stock-holders equity: ---------------
------------ ---------------
Long term investments Capital Stock 50,000
------------ ---------------
Property, plant, equipment ------------ Retained Earnings 35,000 ---------------
Intangible assets ------------ ---------------
------------ ---------------
Other assets: Total Liabilities and stockholders equity
------------ ---------------
Deferred income tax ------------ ---------------
Other
Total Assets
Question#2: (C) What is liquidity?
Liquidity can be explained as a companies available assets which it can terminate/sell-off to clear it’s depts/liabilities. A company with a high current ratio is said to be a liquid because it has the ability
to liquidate its obligations.

Question#2: (D) What is owner’s equity?

Owner’s equity includes the amount that have been received from stakeholders in exchange for shares of stock, the amount of profit the entity has earned for stockholders
that has not yet been paid out to them, and some miscellaneous items, together with the amounts paid to
buy back the company’s stock from their owners.

THE END