Introduction
The main purpose of this assessment is to analyze the performance of the Abs company for the month. The assessment shows the various journal entries and ledger accounts which is prepared by the management during the period (Khan 2015). The business has prepared profit and loss account, balance sheet and a trial balance as well which is shown in the appendix section of the assessment.
Financial Analysis
The transaction which the business has been involved in are recorded initially in the form of journal entries and then the same is processed through various ledger accounts. In addition to this a trail balance is prepared for the purpose of ensuring that the accuracy of the transactions which are posted in the ledger accounts.
The trail balance shows the sales of the business on credit side and the figure is shown to be $ 9,275.76. The main expenses which can be identified for the business is cost of good sold for the business. The figure for cost of goods sold is shown to be $ 5,833.40 for the month of May. The main use of trial balance is to effective check the mathematical accuracy of the trial balance based on debit and credit side balances (Warren, Reeve and Duchac 2013).
The profit and loss account are prepared by the business for the purpose of evaluating the profits of the business during the period (Hatfield 2014). The profit and loss statement show the expenses and revenues which is generated by the business during the period (Needles, Powers and Crosson 2013). The main income which is generated by the business is through sales of goods which are produced by the business during the period. There is another source of income which is secondary source which comprise of interest income and other similar revenues of the business. The presentation of the expenses of the business is shown in format of graph.
The above pie chart shows the operating expenses of the business for month which includes advertisement, depreciation, interest expenses, motor vehicle expenses and rent (Weil, Schipper and Francis 2013). The above diagram makes it clear that major expense which the business has undertaken during the month is related to rent and advertisement.
The balance sheet of the business is prepared in order to determine the financial position of the business during the period and also identify the assets and liabilities which is owned by the business during the period (Robinson et al. 2015).
The current assets of the business which is shown in above figure comprise of inventory, accounts receivable, interest receivables, prepayments and office supplies which are shown in the diagram portrayed above. The prepayments which are shown by the business are maximum in comparison to other current assets of the business.
Reference
Hatfield, H.R., 2014. Accounting: Its Principles and Some ofits Problems. In The Development of Accounting Theory (RLE Accounting) (pp. 21-29). Routledge.
Khan, M., 2015. Accounting: Financial. In Encyclopedia of Public Administration and Public Policy, Third Edition-5 Volume Set (pp. 1-6). Routledge.
Needles, B.E., Powers, M. and Crosson, S.V., 2013. Principles of accounting. Cengage Learning.
Robinson, T.R., Henry, E., Pirie, W.L., Broihahn, M.A. and Cope, A.T., 2015. International Financial Statement Analysis, (CFA Institute Investment Series). John Wiley & Sons.
Warren, C., Reeve, J.M. and Duchac, J., 2013. Financial & managerial accounting. Cengage Learning.
Weil, R.L., Schipper, K. and Francis, J., 2013. Financial accounting: an introduction to concepts, methods and uses. Cengage Learning.
