Edexcel Level 5 BTEC Higher National Diploma in Business

ASSESSMENT ACTIVITY :

Unit Name: Date of Issue: Unit Number: Assignment Submission Date: Assessor: Mode of submission:

Organisations and Behaviour 00/00/2011 3 15/09/2011 ManasaChakravarthi LIVECAMPUS

Name: Jitesh Nath

Registration Number: ETIND0055 Title of the assignment: Organizational and behaviour Title of module: Ethames Graduate school final assignment resubmission

TASK 4.1:PURPOSE OF INCOME STATEMENT: "The income statement is simply a scorecard that summarizes the revenues and expenses of an organization for a specific period of time," Jayson Orr wrote in CMA Management. The income statement reflects how successful a business is fulfilling the prime directive. Preparing an income statement is one of the basic responsibilities of the accounting function. It provides a record of a company's revenues and expenses for a given period of time. Thus serve as the basic measuring stick of profitability. The income statement is considered by many to be a company's most important financial statement. It allows you to judge whether the company is spending too much on particular expenses, and to see whether they are turning a profit for whatever the time period of the income statement.

Purpose of balance sheet: A balance sheet or statement of financial position is a summary of the financial balances. The purpose of the Balance Sheet is to tell the reader the value of the business or organisation. Although typically a balance sheet contains many figures, the figure labelled "Net Assets" is the one which tells the value of the organisation. It yields important information about whether the organisation is in good financial health. It consists of 3 parts: assets, liabilities and ownership equity. A balance sheet summarizes an organization or individual's assets, equity and liabilities at a specific point in time. There are three ways you may use your balance sheet: It can be used for reporting purposes as part of a limited company's annual accounts It can be used to help you and other interested parties such as investors, creditors or shareholders to assess the worth of your business at a given moment as a tool to help you analyze and improve the management of your business

BALANCE SHEET OF JONATHAN LTD ASSETS Current Assets Cash Net accounts receivable Inventory Temporary investment Prepaid expenses Total Current Assets Fixed Assets Long-term investments Land Buildings (net of depreciation) Plant & equipment (net) Furniture & fixtures (net) Total Net Fixed Assets TOTAL ASSETS LIABILITIES Current Liabilities Accounts payable Short-term notes Current portion of long-term notes Accruals & other payables Total Current Liabilities Long-term Liabilities XXX XXX XXX XXX XXX XXX XXX

xxx Xxx

xxx xxx xxx Xxx

xxx Xxx xxx

xxx xxx

Mortgage LOANS Bonds debentures

Xxx 5 million 5million 5million

Total Longterm Liabilities SHAREHOLDERS' EQUITY Capital stock Retained earnings 10 MILLION xxx xxx Total xxx Shareholders' Equity 25 million

TOTAL LIABILITIES & equity INCOME STATEMENT

REVENUE Gross sales Less sales returns and allowances Net Sales COST OF SALES Beginning inventory Plus goods purchased / manufactured Total Goods Available Less ending inventory Total Cost of Goods Sold Gross Profit (Loss) OPERATING EXPENSES Selling Salaries and wages Commissions Advertising

XXX XXX XXX XXX

XXX XXX XXX XXX XXX XXX

XXX XXX XXX

Depreciation Other Total Selling Expenses General/Administrative Salaries and wages Employee benefits Payroll taxes Insurance Rent Utilities Depreciation & amortization Office supplies Travel & entertainment Postage Equipment maintenance & rental Interest Dividend Furniture & equipment Total General/Administrative Expenses Total Operating Expenses

XXX XX XXX

XXX XX XX XX XX XX XX X XX XX XX 3200000 980000 XX XXX XXX

Net Income Before Taxes Taxes on income Net Income After Taxes Extraordinary gain or loss Income tax on extraordinary gain NET INCOME (LOSS)

XXX XX XXX XXX XX

Working Notes: Interest from bonds 500000. Interest from debentures 600000. Interest from loans 600000. Interest from equity 1500000. Total interest is 3200000. Dividend:

We calculate the dividend from the share capital i.e.,10000000 and Overall cost of capital i.e.,9.8% so the total dividend we pay is 980000. INTERPETATION: From the calculated interest rate and the dividend for Jonathan ltd. For the consecutive year we come to an assumption that the interest rate for the company for the next year is 3200000 and the dividend for the next year is 980000 from all the sources such as bonds, debentures, loans, and equity .

reference: http://www.businesslink.gov.uk/bdotg/action/layer?topicId=1073889327
http://www.referenceforbusiness.com/management/Gr-Int/Income-Statements.html#ixzz1XYLoon80