Beruflich Dokumente
Kultur Dokumente
At the end of the session, students are able to: Prepare the classified income statement and balance sheet, Calculate the Cost of Goods Sold in the income statement.
Financial Statements can be prepared directly from a trial balance. A trial balance contains both the income statement accounts (expenses and revenues) and balance sheet accounts (assets, liabilities and owners equity)
BersihMurni Services Trial Balance as at 31 July 2010 Debit (RM) Cash Cleaning equipment Motor vehicle 9,650 26,000 30,000 Credit (RM)
30,000 2,000
35,000
6,450 73,450
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BersihMurni Services Income Statement for the month ended 31 July 2010
RM Revenue Services revenue Less: Expenses Cleaning supplies Salaries Net Profit 2,100 3,200 (5,300) 1,150 6,450 RM
Capital
Add: Net Profit Less: Drawings
35,000
1,150 (2,500)
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33,650 65,650
NOTE
The income statement is prepared from the revenue and expense account. Revenues Expenses = Net profit Net profit is added to owners equity section in the balance sheet; since profits increases owners equity. The balance sheet is then prepared from the asset, liabilities and owners equity. Drawings is deducted from owners equity section since it reduces owners equity.
Owners equity
NON-CURRENT ASSETS
Intended to be used in the business. Not intended for resale. More permanent in nature. Examples;
Land and building Machinery and equipment Motor vehicles Furniture and fixtures
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CURRENT ASSETS
Cash. Will be converted into cash within 12month period. Examples;
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NON-CURRENT LIABILITIES
Debt obligations that are expected to be paid after 12-month period. Examples;
Long-term loans
Loans secured by mortgage
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CURRENT LIABILITIES
Debt obligations that are expected to be paid within 12-month period. Examples;
Bank overdraft
Creditors (credit suppliers) Short-term loans
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OWNERS EQUITY
Any changes made to the owners equity are normally shown in this section. Capital add: Net profit less: Drawings xx xx (xx)
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Net profit
50,000
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NOTE
In trading business, main source of revenue is the sale of goods. Other revenues are derived from non-trading activities such as commission revenue for being an agent, interest revenue from fixed deposit and rent revenue from tenant. Expenses in trading business are classified in to:
Sales revenue COGS = Gross profit Gross profit operating expenses = Net profit
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salaries Delivery expenses salaries Telephone Water and electricity Postage Stationery Insurance
Interest
Financial expenses
on loan
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RM
xxx
(xxx)
xxx
xxx
(xxx) xxx
DETERMINATION OF COGS
1.
Revenue Sales revenue (20 units x RM150) Less: Cost of Goods Sold Purchases (20 units x RM100) Gross profit (2,000) 1000 3,000
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DETERMINATION OF COGS
2.
Revenue Sales revenue (15 units x RM150) Less: Cost of Goods Sold Purchases (20 units x RM100) Less: Unsold stock (5 units x RM100) Gross profit
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NOTE
Unsold units at the end of the period is known as closing stock. Closing stock is shown in the balance sheet under current assets; to show the position of stock in balance. Closing stock will be carried down to the next period as opening stock.
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DETERMINATION OF COGS
3.
Revenue Sales revenue (28 units x RM150) 4,200 500 3,000 (700) (2,800) 1,400
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Besides the cost of purchases, the cost involved in putting the goods into a saleable condition should be charged to COGS.
Carriage inwards Import duty
Insurance freight
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Reasons:
Goods are damaged Faulty goods
shape.
Pauh Jaya Furniture Income Statement for the year ended. RM Revenue Sales revenue Less: Sales returns Less: Cost of Goods Sold Opening stock Add: Purchases xxx xxx xxx (xxx) xxx RM RM
Carriage inwards
Import duty Insurance freight Less: Purchases returns
xxx
xxx xxx (xxx) xxx
xxx
(xxx) xxx xxx
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EXERCISES
1.
Classify each of the following items into Non-Current assets, Current assets, Non-current liabilities, Current liabilities and Owners equity; and Revenue, COGS and operating expenses.
debtors bank loan drawings interest income rent received creditors buildings interest on loan sales stock advertising delivery expenses office salaries purchases machinery cash at bank capital insurance expenses carriage inwards vehicle
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2.
From the following trial balance of Perniagaan Adam, prepare the classified Income Statement for the year ended 31/12/2010 and a classified Balance Sheet as at date.
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