Accounting 9706 · AS & A Level · Preparation of financial statements

Preparation of financial statements — practice question

Bayliss Limited trades as a retailer of ladies’ fashion material. The trial balance shown below was taken from the books of account on 31 December 2015.
(a)[7]

Prepare the income statement for Bayliss Limited for the year ended 31 December 2015.

(b)[5]

Prepare the statement of changes in equity for Bayliss Limited for the year ended 31 December 2015.

(c)[6]

Prepare the statement of financial position for Bayliss Limited at 31 December 2015.

(d(i))[4]

Discuss how each option would affect the future profits of Bayliss Limited.

(d(ii))[3]

Advise the directors on which option to select. Give reasons for your choice.

(e)[4]

Explain how a capital reserve differs from a revenue reserve.

(f)[1]

State one example of a capital reserve.

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