Analyzing The Balance Sheet Of Isaleh And The Related Income Statements And Cash Flows For The Year Ended Essay
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EXECUTIVE SUMMARY The purpose of this report was to analyze the balance sheet of Isaleh and the related Income Statements and cash flows for the year ended 31st December 2014. Specific objectives were to give Babs Lee an understanding of why there is an Income Statement as well as a Cash Flow Statement, what Working Capital is and why it is important and to give an understanding of what a credit sale is in business context. This report recommends strategies to help Babs Lee understand the financial statements of the business.
Table of Contents
EXECUTIVE SUMMARY 2
1. INTRODUCTION 4
2. DISCUSSION 5
2.1 Why the income statement is prepared using the accrual basis of accounting and how it differs from cash accounting 5
2.2 What working capital is and why it is important to manage it 6
2.3 what is a credit sale is and why isaleh sales ukuleles on credit and the costs associated 7
3. CONCLUSION 8
This report was commissioned by Babs Lee, the owner of Isaleh. Its purpose is to analyze and give Babs Lee an understanding of the financial statements and credit sales.
Isaleh is a wholesale business that sells Ukuleles to music shops throughout New Zealand. Babs Lee’s Uncle passed away and left the wholesale business to her. However, the executor of the will, R. Senior provided her the latest financial statements but Babs Lee lacks an understanding of the financial statements, why an Income Statement in needed as well as a Cash Flow Statement,