Income statement – Essay Furious


Additional Information:
1. Stock at 31″ December 2021 valued at cost amounted to £18000. 2. Depreciation is to be provided on fixtures and fittings at 25% on cost and 10% on reducing balance method for motor vehicle. 3. The electricity consumed but not paid for the period is £250. 4. Insurance paid in advance at 31″ December 2021 amounted to £400.

Required: • Prepare Income statement for the year ended 31st December 2021. (26 Marks)
• Prepare Balance Sheet as at 31st December 2021. (23 Marks)
Question 2 (11Marks)

1. Briefly explain to Mr Ovid the owner of Ovid Ventures the impact of the following adjustments on Profit & Loss Account and Balance sheet:
a. Prepaid Expenses b. Accrued Expenses c. Prepaid Income d. Accrued Income
(8 Marks)
2. Briefly explain to the Mr Ovid the owner of Ovid Ventures why the following items will be added back or deducted from the cash flow statement using the indirect method:
a. Depreciation b. Disposal of non-current asset c. An increase in inventories
5

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