ACCOUNTING ANALYSIS

Accounting Analysis



Stage 1) Chart of Accounts

Current Assets

 

Accounts Receivable

34,112.50

Bank West Cheque Account

35,987.52

GST Collected

1,649.52

Inventory

12,741.25

Petty Cash

50

Prepaid Expenses

500

Current liabilities

 

Accounts Payable

11,185.95

Accrued Expenses

375

PAYG Liability

3,669.00

Superannuation Liability

595

Non Current Liabilities

 

Bank West Loan over 8 years

250,000.00

Non Current Assets

 

Furniture and Fittings at Cost

7,475.00

Motor Vehicles at Cost

50,880.00

Office Equipment at Cost

3,300.00

Equity

 

Capital Introduced

100,000.00

Owner's Equity

30250

Current Assets:

Current assets are important to businesses because they are the assets that are used to fund day-to-day operations and pay ongoing expenses. Depending on the nature of the business, current assets can range from barrels of crude oil, to baked goods, to foreign currency. In personal finance, current assets include cash on hand and in the bank, and marketable securities that are not tied up in long-term investments. In other words, current assets are anything of value that is highly liquid. A balance sheet account that represents the value of all assets that are reasonably expected to be converted into cash within one year in the normal course of business. Current assets include cash, accounts receivable, inventory, marketable securities, prepaid expenses and other liquid assets that can be readily converted to cash. In personal finance, current assets are all assets that a person can readily convert to cash to pay outstanding debts and cover liabilities without having to sell fixed assets. In the United Kingdom, current assets are also known as "current accounts."

Non-Current Assets:

A long-term tangible piece of property that a firm owns and uses in the production of its income and is not expected to be consumed or converted into cash any sooner than at least one year's time. Fixed assets are sometimes collectively referred to as "plant". The benefits that a business obtains from a fixed asset extend over several years. For example, a company may use the same piece of production machinery for many years, whereas a company-owned motor car used by a salesman probably has a shorter useful life. By accepting that the life of a fixed asset is limited, the accounts of a business need to recognize the benefits of the fixed asset as it is "consumed" over several years. This consumption of a fixed asset is referred to as depreciation. A portion of the benefits of the fixed asset will be used up or consumed in each accounting period of its life in order to generate revenue. To calculate profit for a period, it is necessary to match expenses with the revenues they help earn. In determining the expenses for a period, it is therefore important to include an amount to represent the consumption of fixed assets during that period (that is, depreciation). The cost of a fixed asset includes all amounts incurred to acquire the asset and any amounts that can be directly attributable to bringing the asset into working condition. The cost of subsequent expenditure on a fixed asset will be added to the cost of the asset provided that this expenditure enhances the benefits of the fixed asset or restores any benefits consumed. This means that major improvements or a major overhaul may be capitalised and included as ...