Week 4 class exercise.docx - UNITED STATES INTERNATIONAL...

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UNITED STATES INTERNATIONAL UNIVERSITY MOD6000: ACCOUNTING FOR NON-ACCOUNTANTS WEEK 4: CLASS EXERCISE 1. Distinguish between the income statement and the statement of financial position. 2. The income statement of Mali Limited for the year ended 31 August 2013 showed the following information regarding the profits and taxes: Sh. 000 Profit before taxation 250 Income Tax -100 Profits after tax 350 Explain what this information means and suggest reasons why a company could be making profits and yet having “negative” taxation (tax refunds). 3. What is meant by the term “bottom line” in the context of the income statement? 4. Explain the reasons why companies maintain revenue reserves – They do not distribute all the profits they make as dividends. 5. The following balances remained in the records of Afri-face Beauty Products Limited for the year ended 30 September 2013. Sh. 000 Sh. 000 Authorized and issued capital: 2 million ordinary shares of Sh. 10 20,000 4 million 5% preference shares of Sh. 5 each 14,000 Share premium 6,000 Accumulated profits on 1 October 2012 4,600 20% Debentures due in October 2018 5,400 Inventory – 1 October 2012 4,000 Sales 88,000
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Christopher Reinemann
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