Answer Posted / Kapil Chauhan
Financial accounting has several key characteristics: 1. Historical cost principle: Transactions are recorded at their original (historical) cost, not their current value. 2. Accrual basis: Revenue and expenses are recognized when they are earned or incurred, regardless of when cash is received or paid. 3. Going concern assumption: The business will continue operations for the foreseeable future. 4. Materiality principle: Only significant transactions and accounts are recorded. 5. Consistency principle: Similar transactions should be treated consistently from period to period. 6. Full disclosure principle: All essential information necessary for users to make informed decisions must be disclosed.
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The following information is extracted from the audited books of accounts of a chain of food stores for the period ended 31st December 2015. Revenue Statement (Trading and Profit and Loss Account for the year ended 31st December 2015. BWP’000 BWP’000 Sales 460 Cost of good sold (220) Gross profit 240 Wages 50 Other expenses 30 (80) Net Profit 160 Note: The purchase figure included in the cost of goods sold of P255 000. Balance Sheet as at 31st December 2015 BWP’000 BWP’000 Fixed Assets 400 Current assets: Stock 80 Debtors (trade) 120 Bank 400 ----- [600] Current liabilities: Trade creditors 300 ------ [300] 300 Net Assets 700 ==== Financed by: Share capital 600 Revenue reserves 100 ------ 700 Shareholders Funds 700 ===== Required: (a) Calculate the following accounting ratios: (i) Current ratio (ii) Acid test ratio (iii) Stock turnover (in days) (iv) Debtors turnover (in days) (v) Creditors turnover (in days) (vi) Return on capital employed (ROCE) (vii) Gross profit percentage (viii) Net profit percentage (b). Give a brief comment on the performance of the company, based on the above ratios.
What qualities have you got that would make you a good accountant?
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Please provide me the entire format of P.F. & ESI
What is your greatest achievement and why?
why i want to join Hawkins company
Do you have any professional experience in this field?
How many invoices on average do you handle on a weekly/monthly basis?
what accounts payable applications are your familiar with?
Why did you choose the a-levels you did?
Tell me do you have any professional experience of this field?
As you know account executives need to be talented salespeople. Do you have experience making sales?
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Which accounting applications are your familiar with?
