Business Accounting
Assignment 1
Q1a)
Income Statement

Statement of Financial Position

Workings

(b) The purpose of a financial statement is to provide useful information in making major decisions in investment and lending decisions of which the major objectives includes finding out the financial position of the company, to asset the stewardship function and predictability of the company's performance and also to identify the strength and weakness of the company. Financial terms are usually referred to into two basic statements, the Income statement and the statement of Financial Position.

The Income statement also known as profit and loss statement is a financial statement that shows a company's financial performance over a specific accounting period. Financial performance is assessed by giving a summary of how the business incurs its revenues and expenses through both operating and non-operating activities. All operation expenses including administration charges , finances expenses and income will be disclosed in an Income Statement.
(cited http://www.investopedia.com/terms/i/incomestatement.asp#ixzz1sgKOh2So , 21 April 2012)

The statement of financial position also known as the balance sheet is a summary of financial balances of a business such as sole proprietorship or a company at a specified moment of time. It represents all assets owned by the business at during the particular moment of time and the claims of the owners and outsiders against those assets at that time. It is in a way a snapshot of the financial condition of the business at that time. This view has been supported by Saraswathi(2012, p.19).

Investors/ Shareholders , to an investor, the income statement reveals much more than a company's earnings. It provides important information on how effectively management is controlling expenses, the