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

Preparation of financial statements — practice question

Richard Ang is a sole proprietor who manufactures one model of sofa bed, and the balances below have been taken from his accounting records at 31 July 2016.
(a)[7]

Prepare the manufacturing account covering the year ended 31 July 2016.

(b)[7]

Prepare the statement of profit or loss for the year ended 31 July 2016.

(c)[3]

Prepare an extract from the statement of financial position of Richard Ang’s business at 31 July 2016 to show how inventories are reported.

(d)[4]

Explain why Richard needs to make a provision for unrealised profit.

(e)[4]

State two advantages and two disadvantages for Richard Ang in helping his sister to set up her business.

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