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Interpretation of Financial Statements of a company

Question

You are provided with basic financial information about a fictional company and are asked to prepare three financial statements for the company. You are then required to discuss the financial health and position of the organisation.

Below, you will find two important documents: the opening statement of financial position and a provisional trial balance for the fictional company.

Remember that the trial balance has been prepared at the end of the year, but note that the retained earnings and inventories balances included are still those figures relating to the start of that year. You can find the complete statements of finance in the Solution document.

Required:

  1. Using the above information, prepare an income statement for the company for the year to 31 December 2009.
  2. Prepare a statement of financial position for the company as at 31 December 2009.
  3. Prepare a cash flow statement for the company for the year to 31 December 2009, using the indirect method and in accordance with IAS 7.
  4. Discuss what inferences can be drawn from the above three statements in relation to the company’s financial position.

Summary

The question belongs to Accounting and it is about preparation of statement of accounts which include income statement, balance sheet and cash flow statement for a fictitious company. Apart from the preparation of the statements of accounts, an interpretation of the company has also been given in the solution.

Total Word Count 284

 

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Comments

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