ASSIGNMENTS

Accounting and Finance 1

Maria Redeker

PART ONE

Profit and Loss Statement on Cash Basis

Michel Angelo

Income Statement (Cash Basis)

 

2008

2009

2010

Sales

£50,000

£50,000

£200,000

Cost of Sales

£25,000

£25,000

£25,000

Net Income

£25,000

£25,000

£175,000

Profit and Loss Statement on Accrual Basis

Michel Angelo

Income Statement (Accrual Basis)

 

 

 

 

 

2008

2009

2010

Sales

£300,000

£0

£0

Cost of Sales

£75,000

£0

£0

Net Income

£225,000

£0

£0

Difference between Cash Receipts and Revenues in Accruals Based Financial Statements

The accruals-based financial statements will exhibit a difference between cash receipts and revenues. The reason is that cash receipts will show the realised transactions, revenue and expenses. It will record the revenues when actually received and expenses when occurred. On the other hand, accrual based financial statements report revenues and expenses at the time of contract, regardless of ...